NRW Holdings leads gains after Jarden upgrade
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The news: Construction and mining contractor NRW Holdings led gains on the ASX in early trade after Jarden analysts upgraded their rating on the stock.
The numbers: The analysts upgraded Perth-based NRW from 'overweight' to 'buy' and hiked its target price from $2.95 to $3.25, following their view that the company is "currently undervalued".
They also added 2% to their core earnings per share estimates for FY25 and FY26 with expectations that stronger industry conditions can drive improved EBITDA margins for NRW.
NRW was the best performer of the ASX 200 by 12.24pm AEST, rising 3.9% to $3.
The context: Jarden analysts said that improved industry conditions around labour and activity levels should help support NRW's earnings into FY25.
They noted that the mix of work, and the headwinds from operational setbacks, can sustain the earnings improvement from FY24E into FY25E, despite concerns about the softness in lithium- and nickel-based battery markets.
The analysts said that NRW's share price has "modestly outperformed" the ASX 200 since its first-half results, but see further upside risk for investors which should drive further strength in its share price.
They also flagged that NRW's revenue visibility is its "best in a long time" with the strong revenue environment set to continue into FY25, while improvement in its EBITDA margin "should be coming ... now a matter of when, not if".
The source: Jarden research
