BofA Securities doubles Hochtief rating to “buy” on strong U.S., data centre grow

Investing.com -- BofA Securities upgraded Hochtief AG (ETR:HOTG) to “buy” from “underperform” and raised its price target to €260 from €167, implying a total potential return of 15%. 

The upgrade reflects strong earnings growth expectations through 2026-27 driven by Hochtief’s leading position in the U.S. construction market, particularly in data centres.

Hochtief’s U.S. unit Turner Construction accounted for about 56% of group PBT in 2024, with U.S. operations representing c.68% of net asset value. 

Turner is the largest contractor in the U.S. by revenue and the top data centre builder as of 2023 (Building Design+Construction, Statista).

Data centres made up 32% of Turner’s backlog in H1 2025, up from 20% a year earlier, and c.20% of Hochtief’s total backlog. 

BofA projects U.S. data centre capex to grow at a 19% CAGR from 2024 to 2028, underpinning Turner’s strong backlog and growth outlook. 

Turner posted a 41% revenue rise and 59% operational PBT growth in H1 2025, with orders up 23% year-over-year in EUR terms.

BofA forecasts a 14% sales CAGR and a 22% EBIT CAGR for Turner from 2025 to 2028.

Turner’s order backlog rose 10% YoY in H1 2025, or 23% after adjusting for FX, and includes projects such as a $10 billion Louisiana data centre and a $6 billion Pennsylvania facility announced post-H1 2025.

Hochtief guides for Turner’s operational PBT margin to reach 3.5% in 2026, up from 3.0% in 2024.

The upgrade also factors in Hochtief’s balance sheet strength. Net debt is forecast at €204 million by end-2026 (ND/EBITDA of 0.1x).

Should Hochtief acquire the remaining 40% of Australian mining contractor Thiess by December 2026, net debt would rise to €0.9 billion, with leverage at a comfortable 0.4x. BofA estimates such a deal could be about 4% EPS accretive in 2027. 

Hochtief currently holds 60% of Thiess. ACS, Hochtief’s main shareholder with an 80% stake as of H1 2025, is not expected to increase its stake significantly in the near term.

Valuation comparisons support the upgrade. Hochtief trades at 19x 2026E P/E, below the U.S. E&C peer average of 24x, despite having significantly higher data centre exposure (20% of backlog vs 0-5% for U.S. peers). 

BofA applies a 15x EV/EBITA multiple to Turner for 2026, reflecting premium positioning relative to European peers.

Valuation multiples for Hochtief’s other divisions were also adjusted: Asia-Pacific business CIMIC to 14x from 13x and European E&C to 11x from 10.5x, given improved visibility on German infrastructure stimulus.