RBC Capital Markets raises target price on Ashtead

RBC Capital said Ashtead's "strong" Q2 earnings and raised full-year 2023 outlook had led it to lift 2023 and 2024 earnings per share estimates by roughly 6% and 9%, respectively.

As a result, RBC said its price target also pushed up as the group "continues to execute well" in its core US market, where the supply/demand balance remains "highly favourable", driving both volume and rate improvements.

"Although some historically reliable demand indicators have rolled over, Ashtead is convinced that the non-resi project pipeline is robust and that significant fiscal stimulus creates a rich seam of counter-cyclical rental equipment demand," said the Canadian bank.

"We continue to see AHT as a structural long-term beneficiary in the fragmented North American equipment rental market, with optionality around international expansion. Management is best in class, and we see the revenue mix as ever more resilient, bolstered by rapidly-growing, under-penetrated specialty solutions and the near-term stimulus of the vast US Infrastructure, CHIPS and Inflation Reduction Act in coming years."

Reporting by Iain Gilbert at Sharecast.com