Berenberg hikes Kier target price to 370p

(Sharecast News) - Analysts at Berenberg lifted their target price for Kier on Wednesday, raising it from 300p to 370p, as they reiterated that the contractor's evolving strategy and clearer medium‑term framework were being well received by the market. Berenberg said Kier's FY26 results showed a strong year, with revenues up 7.5% to £4.39bn and adjusted underlying earnings rising 6.7% to £169.8m, driven largely by a robust performance in infrastructure, where revenues grew 10% and margins reached 5.5%. Forward visibility remained high, with a record £11.9bn order book and more than 95% of FY27 revenue already secured.

The German bank highlighted Kier's decision to stop new investment in its property arm from FY27, redeploying capital to strengthen the balance sheet and focus on core infrastructure and construction activities. The existing £220m property portfolio will be built out and sold over the next three to four years.

Updated medium‑term targets include mid‑single‑digit revenue growth, 4.0% to 4.5% operating margins, cash conversion above 90%, dividend cover of around 3x, average net cash above £200m by FY29, and double‑digit adjusted earnings per share growth.

Berenberg also pointed to Kier's improved capital position, with year‑end net cash of £232.4m and average net cash of £10.7m, a sharp turnaround from FY25's average net debt.

It now assumes a recurring £25m annual buyback and full repayment of the 2029 9% bond in FY28, which could reduce annual interest costs from roughly £33m to £10m. Updated forecasts imply a 12% adjusted EPS compound annual growth rate from FY26 to FY29.

Berenberg added that Kier's valuation - 12.0x FY27 price-to-earnings, 5.8x underlying earnings and 8.0x EBIT - remained attractive given the improved clarity on strategy and delivery.



Reporting by Iain Gilbert at Sharecast.com