Broker snap: United Rentals provides positive read-across for Ashtead

18th Apr 2012 10:18

Rental equipment firm Ashtead was a high riser on the FTSE 250 on Wednesday morning, helped by last night's strong results from US peer United Rentals.United Rentals reported first quarter rental revenue growth of 20.5% after the close on Wall Street on Tuesday, causing shares to jump 6% in after-market trade. The growth rate was 5.5 percentage points ahead of the market consensus. It also reiterated its 2012 guidance of 5% growth in rental pricing.According to US broker Jefferies, these results underpin its longer-term Ashtead investment case. This is based on growth of increased rental and less ownership in North America, further pricing gains in 2012 and both Ashtead and United Rentals gaining market share from smaller, more financially constrained peers."We stress these successive record quarterly performances from both United Rentals and Ashtead are being delivered without the benefit, as yet, of any macroeconomic recovery," the broker said.Furthermore, data from the American Institute of Architects (Architecture Billings Index) and Rouse (tracking US equipment residual values) prompts Jefferies to continue to see upside risks to consensus estimates for Ashtead in 2013.The broker recommends to buy Ashtead ahead of the full-year results in June. A 300p target price is given.Shares were up 5% at 254.2p in mid-morning trade.BC