Broker snap: Aggreko's buy rating reiterated by Deutsche Bank

12th Sep 2013 14:15

Aggreko's 'buy' rating was reiterated by Deutsche Bank in a note to investors on Thursday, as the broker said it expects the temporary power generation company to achieve improved contract conversion in 2014.The analyst said contracts in power projects have been hard to come by in the past year but is was an "issue of timing rather than anything structural".Deutsche Bank also believes emerging market pressures will continue to weigh on profitability in the near term.The broker expects underlying pre-tax profit for the 2014 financial year to be broadly flat year-on-year at £305m. "Big picture, we assume no growth in power projects, with any progress in the local business offset to a large degree by negative FX headwinds. "A stronger US dollar means that it is more expensive for emerging market economies to purchase rental power from Aggreko, and this leads to delays in decision making."However, Aggreko's top-line organic growth has broadly tracked rivals Cummins and Caterpillar's power division segment growth, it said.Yet Deutsche acknowledged the risks including growing competition, pricing pressure, bad debt exposure, equipment seizing and forex movements. Shares were down 2.97% to 1,602p at 14:41 on Thursday.