(Sharecast News) - Aggreko was under the cosh on Wednesday as Morgan Stanley initiated coverage of the stock at 'underweight' with a 400p price target.
The bank said temporary power provider Aggreko has few catalysts for a re-rating beyond a positive oil price surprise and looks more likely to face further valuation pressure rather than a re-rating.
"The economics for temporary power are not broken and a de-risked receivables book is reassuring," MS said.
It noted that with 25% of the utilities division debtors written down to zero, a material overhang has been removed. However, many legacy Aggreko emerging market customers are seeing increased indebtedness and forecast to see muted GDP recoveries, MS said.
"Using MS economists' forecasts, Aggreko's weighted geographic outlook points to a post-Covid 'GDP-minus' recovery."
Morgan Stanley also said that oil weakness, possible further impairments and a lengthy 'green' transition need to be navigated.
"With the slowest profit recovery in business services, we initiate at underweight."
At 1245 BST, the shares were down 4.9% at 427.33p.
9 Dec 2022 10:27
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