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(Sharecast News) - JPMorgan Cazenove said on Monday that Experian was its top pick in the European business services sector, along with Bureau Veritas, both of which it rates at 'overweight'.
"Experian remains our most-preferred long-term pick in European business services, and a top pick for the rest of 2024," it said.
"We have confidence the company will grow at least high single digit percentage organically in the medium term supported by its high-quality portfolio of new products at different stages of development.
"For FY Mar-25, we forecast 8%. Experian has a strong balance sheet and opportunities for value-add acquisitions, on top of continued organic investments."
JPMorgan Cazenove placed Ashtead on 'positive catalyst watch' on Monday ahead of its capital markets day in Atlanta on 29 April, as it expects the stock to outperform into/on the event.
The bank said that after the success of the Sunbelt 3.0 strategy - launched at the last CMD in 2021 - where the group said it will exceed its targets, it is set to lay out its "much anticipated" five-year plan.
JPM said teasers for Sunbelt 4.0 suggest continued focus on 'Growth' and 'Resilience' but also, 'Performance', which is likely to highlight margin progression - a reflection of the evolution of the business model from just a growth story, which it detailed in its recent "deep dive".
"As such, we expect the stock to outperform into/on the event and place the stock on positive catalyst watch."
JPM, which rates the shares at 'overweight' with a 6,600p price target, expects the messaging at the CMD to be positive, with a bullish message on growth underpinned by multiple company-specific drivers and end markets (in particular mega projects), margin expansion, and increased balance sheet optionality following a moderation in capex, creating a more sustainable equity investment.
"In our view, the targets will likely cautiously bracket high single digit percentage (e.g. 6-9%) organic rental revenue growth, driving a circa 10-16% earnings per share compound annual growth rate when including the balance sheet optionality, ahead of FY29e consensus (albeit limited forecasts).
"As with the previous CMD, we would expect the group to outperform any targets over the time horizon, which could see the group deliver circa 13-18% adjusted EPS CAGR."
JPM said that with the stock lagging peers year-to-date and trading in line with its five-year average on EV/EBITA and close to its widest discount to United Rentals (its closest peer) in five years (excluding April 2020), it continues "to see risk/ reward as attractive, seeing the CMD as a positive catalyst".
