Jefferies upgrades HomeServe as Brookfield mulls offer

Jefferies upgraded HomeServe to ‘hold’ from ‘underperform’ after Canadian property investment group Brookfield Asset Management announced on Thursday that one of its private infrastructure funds was in the early stages of considering a possible offer for the company.

The bank, which lifted its price target on the stock to 830p from 775p, said the announcement suggests the shares have reached a potential floor.

"Following a sustained period of underperformance the shares had moved though our previous underperform price target, which we feel was supported by weaker KPIs," it said.

Jefferies noted that HomeServe has underperformed the FTSE 250 by 30% over the past 12 months, driving it to trade around 10x EV/EBITDA, far below its five-year average of 15x and back to levels last seen during FY15.

"With FY22 consensus appearing better underpinned and a potential bid, we feel the magnitude for further downside may be more limited," it said.

At 0920 GMT, the shares were up 3.5% at 835p.