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Investing.com - Berenberg has initiated coverage on Mears Group (LON:MER) with a Buy rating and a price target of GBP5.50, citing the company’s strong position in UK housing services.
Mears Group operates as the leading provider of housing services for the UK public and social housing sectors through two main segments: maintenance and management. The maintenance segment includes rapid-response repairs, planned refurbishments, and compliance services, while the management segment provides day-to-day management and comprehensive housing solutions.
The company has outlined a strategic expansion plan focused on emerging compliance services and positioning itself to deliver additional services in white- and blue-collar markets. Berenberg notes that Mears also has a growing opportunity pipeline with central government, including several significant potential contracts.
Berenberg highlights that Mears operates with an asset-light business model that generates strong cash flow, complemented by a solid net cash position. This financial strength provides opportunities for strategic bolt-on acquisitions and returning surplus cash to shareholders through buybacks.
In the past two years, Mears has purchased £89 million of its own shares, representing approximately 30% of its current market capitalization, demonstrating its commitment to shareholder returns.
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