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More to come for Ashtead and US plant hire firms from Trump plans

Tuesday, November 29, 2016 7:33
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Ashstead (LON:AHT) is set to be a clear winner from the Trump infrastructure windfall reckons US broker Jefferies, which has upped its price target by more than 10%.

President -elect Trump has raised the possibility of US$1tn of infrastructure spend; potential energy deregulation and a possible reduction of the 35% corporate tax rate, something that will rental operators’ free cash flow and earnings.

While the US construction market is mixed with declining industrial production and construction spend, a boost to infrastructure would add extra innings to the business cycle for both construction and equipment rental companies.

Shares have already soared between soared between 20%-49% since 8 November, but there is more to go for.

“With their national coverage and broad equipment fleets, we see rental leaders United Rentals (NYSE:URI) and Sunbelt Rentals (Ashtead LON:AHT)) best placed for any infrastructure boost.

“Additionally, URI & AHT’s lower leverage than peers gives flexibility for continued buybacks, selective M&A and organic expansion (particularly specialty rental).”

Ashtead’s target price rises to £17 from £15.50, while URI goes up to US$115 from US$92.

Southern-based Neff (NYSE:NEFF), however gets a downgrade to hold as Jefferies believes national-based operators are better placed with a reduction in its price target to US$12 from US$14.

Hertz rental spin-off Herc Rentals (NYSE:HRI) is a hold following its recent debut with a US$44 price target. 

Story by ProactiveInvestors


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