Panmure lifts Ashtead forecasts after 'another sparkling update'

4th Mar 2014 10:11

Panmure Gordon has raised its target price for Ashtead from 971p to 1,047p and retained its 'buy' rating, following 'another sparkling update' from the equipment rental business.The company reported a bumper set of third-quarter earnings, driven by a strong performance from its two main divisions, and now expects full-year results to come in ahead of previous expectations."Great stuff from Ashtead here, despite tough comps delivering third quarter results materially above expectations," said Panmure analysts Paul Jones and Mike Allen."This suggests not only that Ashtead should continue to deliver strong results given its increasing fleet size and improving yields, but also that our estimates for both the current year and that to April 2015 are too low."The analysts have lifted their earnings per share forecast for the year ending April 2014 by 5.9% to 45.5p and their April 2015 estimate by 7.8% to 52.4p.This places the shares on a price-to-earnings ratio of 18.7, falling to 16.2, "which we believes looks good value given the potential for further growth".Jones and Allen said: "As one of the stronger players in the industry (both in terms of fleet size and financial firepower) Ashtead should continue to enjoy good levels of organic growth, no doubt supplemented by bolt-on acquisitions. FX aside, we see little reason why the on-going growth story will be de-railed."The stock was up 8.5% at 918p by 10:26 on Tuesday.BC