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(Sharecast News) - Analysts at Berenberg hiked their target price on Hill & Smith from 2,950p to 3,180p on Monday, citing upgraded earnings forecasts and continued momentum in the group's US operations.
Berenberg said Hill & Smith delivered a strong first half, with its strategic focus on the US market driving doubledigit organic growth across key divisions and offsetting anticipated weakness in the UK. Group revenues rose 8% to $606.7m, while underlying EBIT also increased 8% to $102.9m, keeping margins steady at 17%.
The German bank noted that robust demand in US end markets and contributions from recent acquisitions underpinned Hill & Smith's performance, prompting management to raise fullyear expectations.
Berenberg said Hill & Smith's US Engineered Solutions and Galvanizing Services divisions led the way, delivering 14% and 11% organic constantcurrency growth, respectively. Within US Engineered Solutions, Berenberg highlighted V&S Utilities and the Composites Group as the principal growth engines, each capable of sustaining 10% to 12% organic growth per year into the medium term given strong US infrastructure demand. Management has already flagged further investment to expand capacity.
Portfolio activity remained busy in the first half, noted Berenberg, with the acquisitions of Freeberg and Hentech strengthening the firm's exposure to highergrowth areas such as data centres and power generation. Freeberg, acquired for $38.8m, was expected to benefit significantly from US datacentre trends through FY26 and FY27. With FY26 preIFRS 16 net debt/EBITDA at around 0.5x, Berenberg said Hill & Smith has ample funding capacity and a welldeveloped M&A pipeline.
Berenberg, which kept its 'buy' rating on the stock, also moved its reporting currency to USD and increased underlying EBIT forecasts by around 3% across the period, supporting the new price target. It added that Hill & Smith currently trades on 20.6x FY26 earnings and 12.6x EBITDA.
Reporting by Iain Gilbert at Sharecast.com
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