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Investing.com - Deutsche Bank upgraded Keller Group plc (LON:KLR) (OTC:KLRGF) from Hold to Buy and set a price target of GBP16.60, citing a margin-driven first-half earnings beat and an attractive valuation.
The global ground engineering company has seen its shares fall approximately 20% since their May highs, which Deutsche Bank believes has de-risked current year consensus estimates. The firm noted that comparatives are easing in the second half, particularly at the Suncoast division, while the order book stands at a record level.
Deutsche Bank highlighted Keller’s valuation at just 6x price-to-earnings ratio, close to historic lows, and forecasted the group to reach a net cash position for the first time by fiscal year 2025. This financial strength underpins the 9% total distribution yield, according to the bank.
Keller Group maintains diversified sector exposure across Infrastructure (33% of revenues), Power/Industrial (27%), Residential (21%), and Commercial (19%). North America contributes more than 70% of group profits, where tendering and pricing remain strong, supported by data center activity.
The company has 0.5-1.5x EBITDA headroom within its leverage target to fund potential acquisitions and/or continue returning surplus capital through share buybacks, Deutsche Bank noted.
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