RBC Capital Markets starts Genuit at ‘sector perform’

RBC Capital Markets initiated coverage of Genuit on Friday with a ‘sector perform’ rating and 515p price target.

It noted the share price has rebounded more than 70% since October 2023 to trade near its long-term EV/EBIT multiple of 13x above the peer average of about 12x.

"This reflects an expected turnaround in underlying UK markets late 2024E," RBC said.

"Our forecasts assume a flat 2024E, followed by underlying market recovery, driving revenue and EBIT compound annual growth rate of circa 5% and circa 8% through 2026E."

The bank said this is the low end of Genuit’s mid-term target of outgrowing the market by 2-4%, as it maintains caution on the timing and scale of a turnaround.

RBC said Genuit is well diversified across UK domestic markets, focused on both new build and repair, maintenance and improvement, as well as commercial and residential construction.

"These divisions are well positioned in their respective markets with strong growth potential aligned with structural drivers and supported by leading market positions, margin expansion potential, and highly fragmented markets creating opportunities for acquisitions," it said.