Broker tips: Ashtead, Aberdeen, Dunelm

7th Jan 2014 11:39

Jefferies has raised its target price for equipment rental firm Ashtead from 880p to 900p and kept a 'buy' recommendation, citing the company's significant growth potential in the US. "With just 6% share of fragmented $33bn US equipment rental market, we believe by opening 50 additional branches per annum, Sunbelt [Ashtead's US division] could its double its market share to 12% in four to six years, self-financed by robust cash flows, whilst maintaining a net debt-to-[operating profit ratio] below 2.0, with progressive shareholder dividends," said Equity Analyst Justin Jordan.Canaccord Genuity has lifted its target price for fund manager Aberdeen from 520p to 586p and kept a 'buy' rating, saying that growth is expected to return within Scottish Widows Investment Partnership (SWIP).While integration costs are likely to impact earnings accretion for Aberdeen in the year ending September 2014, Canaccord said that the shares are trading at just 12 times estimates earnings for the year ending September 2015. The broker said this "looks cheap" compared with the wider sector.Numis Securities reiterated its 'add' rating and 1,000p target price for homeware retailer Dunelm after the company swung back to like-for-like (LFL) sales growth in the second quarter.The broker said: "We leave our full-year profit before tax estimate [£116.8m] unchanged, and believe that the premium valuation (trading at 20.8 times prospective earnings) is justified by the visibility of the growth story, the quality of the customer proposition, and the strong returns metrics."BC