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Berenberg lowers target price on Renew

10:54, 28th January 2025

Analysts at Berenberg lowered their target price on engineering services firm Renew Holdings Plc   Follow | RNWH from 1,350.0p to 1,200.0p on Tuesday following the company's recent trading update.
Berenberg said Renew's "usual meet-and-beat earnings momentum story" gave way to management cautioning that it expected trading for the year to 30 September to be below previous market expectations.

In the context of a 9% adjusted underlying earnings downgrade to its FY25 forecasts, the shares fell by roughly 22% on the day, a move that Berenberg considers to be "overdone", especially when considering that the shares had already drifted approximately 13% since 26 November.

"While short-term headwinds in the rail sector are a frustration, they distract from a provably strong management team and business model - operating margins remain resilient, returns are healthy, and the group's decentralised compounder model has a significant runway to continue, supported by a less-than-0.1x levered balance sheet," said the German bank, which reiterated its 'buy' rating on the stock.

"At just 11.5x FY25 P/E (10.5x FY26), on what we think are now comfortably positioned, if not conservative outer year forecasts, we think this offers an attractive entry point into a quality long-term story."

 

 

 

 

 

Reporting by Iain Gilbert at Sharecast.com

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