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(Sharecast News) - Analysts at Berenberg hiked their target price on construction products supplier Hill & Smith from 1,325.0p to 1,420.0p on Wednesday, stating the group offered investors three "attractive characteristics".
In particular, Berenberg highlighted how near-term trading was "resilient" considering recent market volatility stemming from the Covid-19 pandemic, with organic sales up by 4.8% in the first quarter, before the outbreak and associated lockdowns drove a 26% reduction in sales across April and May.
The analysts stated that H&S's road safety products business was "relatively unaffected" during the period and while acknowledging its US operations were weaker, the firm benefited from its 'critical business status' - allowing facilities to remain open throughout the second quarter. However, the German bank did note H&S's security products, pipe supports and UK/French galvanising operations had been more negatively affected.
The broker also pointed to a "gradually improving outlook" for H&S, stating the company appeared to be "through the worst of the downturn" - with all facilities back open, activity levels improving in key regions and May trading modestly ahead of April.
Finally, the analysts saw some "attractive" longer-term drivers for H&S, stating that even before the Covid-19 pandemic, the outlook for infrastructure spending was encouraging, particularly on UK roads projects.
2 Jul 2021 15:51
