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On Friday, RBC Capital Markets maintained its Outperform rating on Breedon Group (BREE:LN) stock, a leading construction materials company, with a steady price target of GBP5.75.
The firm's analysis suggested that Breedon Group could significantly expand its operations in the United States to match the scale of its Great Britain and Ireland non-cement businesses within the next 5-10 years.
The growth strategy would primarily hinge on mergers and acquisitions (M&A), with the possibility of scaling up through smaller add-on deals, larger platform transactions, and vertical integration.
The RBC analyst highlighted that the envisioned expansion in the US could be realized without the necessity for a capital raise, assuming the company pursues a series of bolt-on acquisitions and other strategic transactions.
However, the analyst noted that if Breedon Group were to undertake a 'transformational deal' to accelerate its growth, such an ambitious move might require additional funding through a capital raise.
Breedon's recent Capital Markets Day (CMD) presentation underscored the company's potential for growth and its ambition to replicate its non-cement business model from Great Britain and Ireland in the US market. The CMD also shed light on the company's strategic vision and the role of M&A in driving future growth.
The reiteration of the Outperform rating and the GBP5.75 price target by RBC Capital Markets reflects confidence in Breedon Group's strategic direction and its ability to grow through acquisitions. The analyst's comments underscore the view that the company is well-positioned to execute its expansion plans and potentially enhance its presence in the US market.
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