Ashtead Vulnerable
May 11th, 2009
The signs are there that things may be bottoming out for the housing market and in particular housebuilders. Plant hire group Ashtead (AHT) has fared well in recent weeks, as the fortunes of its business depends heavily on the strength of the construction sector.
But this morning the group warned the markets that it expects underlying full year pre-tax profits to 30 April 2009 to be within the lower end of current forecasts. Added to this the group said recent rental rate and revenue trends suggests that profits in fiscal 2009-2010 are also likely to fall below the board’s earlier expectations. Although rental volume continue to hold up well, and in line with expectations, as expected, construction markets in the UK and US are weaker with private sector projects particularly impacted by the shortage of funding. The Ashtead board alo said it had “reduced net debt by GBP100m to GBP1.04bn”, and it remains “highly confident in its strength” for the longer term.
In a fragile and recovering construction marketplace, Ashtead shares have recovered well in recent months. The news today will be seen as a setback, and while the prognosis is brighter for the longer term, the shares currently look vulnerable. I see short term selling opportunity here, with a short term target price of 49p, although watch for housing data announcements, as any improvement here will almost certainly impact on the shares
Blue Index :|
May 11th, 2009
The signs are there that things may be bottoming out for the housing market and in particular housebuilders. Plant hire group Ashtead (AHT) has fared well in recent weeks, as the fortunes of its business depends heavily on the strength of the construction sector.
But this morning the group warned the markets that it expects underlying full year pre-tax profits to 30 April 2009 to be within the lower end of current forecasts. Added to this the group said recent rental rate and revenue trends suggests that profits in fiscal 2009-2010 are also likely to fall below the board’s earlier expectations. Although rental volume continue to hold up well, and in line with expectations, as expected, construction markets in the UK and US are weaker with private sector projects particularly impacted by the shortage of funding. The Ashtead board alo said it had “reduced net debt by GBP100m to GBP1.04bn”, and it remains “highly confident in its strength” for the longer term.
In a fragile and recovering construction marketplace, Ashtead shares have recovered well in recent months. The news today will be seen as a setback, and while the prognosis is brighter for the longer term, the shares currently look vulnerable. I see short term selling opportunity here, with a short term target price of 49p, although watch for housing data announcements, as any improvement here will almost certainly impact on the shares
Blue Index :|