Analyst Charlie Campbell from Stifel Nicolaus maintained a Buy rating on Grafton (GFTU – Research Report) and keeping the price target at p1,175.00.
Charlie Campbell has given his Buy rating due to a combination of factors that highlight Grafton’s strategic positioning and financial health. The recent acquisition of HSS Hire’s Irish business for €32 million is a key driver, as it expands Grafton’s tool and equipment hire offerings and is expected to enhance earnings by 1% in its first full year. This acquisition demonstrates a strong return on investment with a ROIC of 12.3%, and it is considered a low-risk, bolt-on addition that increases Grafton’s market exposure in Ireland.
Furthermore, Grafton is well-managed with a robust balance sheet, and it benefits from significant exposure to the growing markets of Ireland and Spain, while also being positioned to capitalize on economic recovery in the UK and other regions. The company maintains substantial cash reserves, which can be strategically deployed for future acquisitions, enhancing its market presence. The combination of these strategic moves and financial stability underpins the Buy rating, with a DCF-based target price of 1,175p.