JP Morgan stays at 'overweight' on Ashtead ahead of expected 'strong' Q2 update

Analysts at JP Morgan reiterated their 'overweight' recommendation and 2,450.0p target price for shares of Ashtead ahead of the group's second quarter update on 10 November.

In a research note sent to clients, analyst Andrew Wilson said he expected the international equipment rental group to report another strong quarter, despite the lower frequency of hurricanes seen in 2019 and with underlying trends remaining "solid".

Wilson also expected management to reiterate its guidance for full-year growth rates and capital expenditure, although its initial comments on capex in financial year 2021 would likely be dented by a more "modest" outlook for construction and "significant" previous investment in its fleet.

"We do not see the Q2 in isolation as a particular catalyst, especially ahead of seeing a final consensus," the analyst added.

To back up his arguments, the analyst also highlighted Ashtead's above above sector earnings growth "driven as much by own actions as the market", balance sheet optionality "whatever the macro outlook" and its "unchallenging" valuation.