Shares in Galliford Try Holdings PLC (LSE:GFRD) have hit their highest level since 2009, allowing for stock splits, with the shares up 13% to 232.92p since the posting of final results yesterday.
Earnings per share were ahead of forecasts and analysts were impressed.
The "key news" in the results is the reduction in dividend cover to 1.8x from 2.0x, said Peel Hunt, which meant the dividend of 10.5p was declared versus the 8.5p the broker had forecast.
Peel analyst Andrew Nussey noted that the new financial year has started well with trading at the upper end of expectations and that management has increased confidence in the delivery of FY26 objectives.
Nussey "confidently" increased his PBT forecasts for the new year from £24.0 million to £26.0 million to result in EPS rising to 18.2p from 16.6p, with the 10% increase flowing into outer years too.
As well as 2026 forecast PBT of £34.7 million representing circa 50% growth on the past year, he noted that 2024 net cash of £232 million and investments £45 million is greater than the current market cap.
At Liberum, analyst Joe Brent said EPS was 6% ahead of its estimates despite the £2 million expected loss on small acquisitions.
He increased his 2024 and 2025 EPS estimates by 2% despite already being top of the consensus range, though average cash estimates for the current year were nudged down from £171 million to £155 million as the business invests in growth.
Liberum maintained its target price of 270p, also noting that investments and average cash equal 196p compared to the latest share price of 208p.
At Panmure Gordon, as well as observing that the contractor is "benefiting from market share gains and favourable spending trends within the public and regulated industry segments of the construction market", analyst Adrian Kearsey also drew attention to the order book and the pipeline of work.
He said the pipeline is "crucial", with Galliford Try securing places on frameworks including the £5.1bn Defence Estate Optimisation Portfolio, the £4.5 billion Southern Construction Framework and the £2.5 billion MoJ Constructor framework and the £600 million Southern Water AMP framework.
Kearsey views the FY26 targets of £1.6 billion revenues and underlying margins of 3.0% are "realistic, but not factored into the share price".
With the shares trading on a forward P/E of 10 times next year's earnings and the company's public sector focus "delivering", he anticipates "the shares will continue to trend higher".
Panmure's target price was hiked from 230p to 270p, equating to 10 times forwards earnings 18 months out.