JP Morgan raises estimates on Ashtead ahead of Q1 results

JP Morgan said it expects a continuation of the trends reported within Ashtead's fourth-quarter results, meaning its first-quarter numbers will likely beat standing consensus.

JPM now forecasts first-quarter sales of £1.17m, an 8% reported decline year-on-year, and adjusted EBITDA of £539.0m at a 45.9% margin as it anticipates management will take only "limited cost actions" in order to protect long-term prospects.

"The group is clearly trading through this downturn in a very different way to 2008/09 and much better than was feared, increasing confidence that the business model has actually changed and that the equity story is sustainably stronger," said JPM.

While the analysts said they recognise the uncertainties in the outlook, they still we expect the company-specific drivers of share gains, diversification and much-improved cash generation to provide enough support to the "relatively inexpensive" stock.

JPM also kept its 'overweight' rating on the stock.