JP Morgan has upgraded shares in Kingspan Group PLC (LSE:KGP) to ‘overweight’, citing the building supplies company's strong growth and improving energy efficiency requirements as reasons for their positive outlook.
The bank believes that Kingspan's long-term ambitions are underpinned by these factors and that the company has a path for re-rating ahead.
Its trading profit estimates for 2023 are 6% above consensus, with a bull-case scenario showing a potential 20% upside to the 2023 consensus.
JPM expects Kingspan to deliver approximately 5% inorganic growth year. going forward, supported by the company's strong balance sheet.
It also predicts an improvement in margins as new businesses mature, which it believes could lead to a valuation rerating.
The bank has also revised its price target to €83 a share (from €62), implying 29% “upside potential”.
The shares were trading 3% higher at €66.40.