Berenberg hikes target price on Helios Towers following Q1 numbers

(Sharecast News) - Analysts at Berenberg hiked their target price on telecommunications tower business Helios Towers from 230p to 275p on Thursday after the company released its first quarter results earlier in the day.

Berenberg said Helios had delivered "outstanding tenancy additions", which drove a material adjusted underlying earnings beat in the quarter, and also noted that it had made "a significant upgrade" to its full year expectations for tenancy additions, adjusted EBITDA and recurring free cash flow, as well as a requisite increase in discretionary capex.

"We upgrade our FY26, FY27 and FY28 forecasts for recurring free cash flow by 7%, 4% and 5% respectively," said Berenberg.

The German bank noted that while more tenancy additions will result in a higher discretionary capex spend in FY26, "the significant benefits of the additions" will flow into FY27, FY28 and beyond. It also pointed out that of the 1,000 incremental tenancies implied by the upgrade, Helios now expects to see a $5m benefit to adjusted EBITDA in FY26, but a benefit of "at least $15m" to adjusted EBITDA and recurring free cash flow in FY27, FY28 and beyond.

"We now calculate Helios's incremental ROIC in FY26 to be c20% - well above any reasonable estimate for its cost of capital - and c30% from FY26 to FY30. We emphasise that there is no change to Helios's target of a 2.5x tenancy ratio by FY30," said Berenberg, which reiterated its 'buy' rating on the stock. "Helios trades on 9.1x FY26 EV/EBITDA and a 7.8% RFCF yield."

Reporting by Iain Gilbert at Sharecast.com