Aggreko runs out of power after Peel Hunt downgrade

Aggreko ran out of power on Tuesday after Peel Hunt downgraded its stance on the stock to 'reduce' from 'hold' and cut the price target to 700p from 800p as it argued that challenges remain "significant".

The broker said management at the temporary power provider is performing well across "tricky" markets, with the third-quarter update providing some reassurance that Aggreko remains on course, but the "ever-shifting challenges" remain significant.

Peel Hunt said challenges are significant given the utility business appears to be in structural decline, the cycle exposures, working capital pressures and the growing competition from 'generalists' who continue to invest and expand.

"We are wary that the fragile global macro-economic backdrop is likely to lead to customer hesitancy and greater off-hire risk," said analyst Andrew Nussey.

"Although self-help will mitigate some earnings pressure and support an improving return on capital employed profile, the pace of ROCE recovery looks to be under increasing external pressure."

At 1450 GMT, the shares were down 4.1% at 718p.