RBC Capital Markets keeps Ashtead at 'outperform'

(Sharecast News) - RBC Capital Markets said firsthalf trading at Ashtead Technology was solid, but slightly softer margins linked to ongoing Middle East and Asia disruptions prompted the broker to trim its estimates.

Ashtead expects H126 revenues of �100.2m, broadly in line with the �102m consensus, but activity weakness in the Middle East and APAC pushed adjusted underlying earnings and EBITA margins down to 37.8% and 25.0%, below typical firsthalf levels. Capex was weighted to H1, nudging leverage up to 1.4x, though the group still expects to finish FY26 below 1.0x.

Guidance was left unchanged, with management assuming Middle East operations normalise and expecting singledigit revenue and EBITDA growth for the year.

RBC, which reiterated its 'outperform' rating and 560p price target, trimmed its FY26 numbers to reflect lower contribution from highermargin Middle East work.

The Canadian broker said record backlogs among Ashtead's largest oil and gas customers, scheduled for execution through 2026-29, underpin a sustained period of offshore activity.

Low breakeven economics and large offshore resources should support continued project sanctioning, providing a favourable backdrop for pricing and margin improvement, added RBC

Ashtead trades on a 4.8x FY27 enterprice value/EBITDA ratio, with RBC's 560p target based on a 6.0x multiple in line with wider offshore services peers.

Reporting by Iain Gilbert at Sharecast.com