Cavendish has initiated coverage of Hercules Site Services PLC (AIM:HERC) with a bullish 55p price target, implying a 100% upside against the AIM-listed group’s publication price.
“In our view, the group is well positioned to benefit from the structural imbalance of skilled labour supply within UK construction, alongside the positive backdrop for investment into UK infrastructure,” said Cavendish.
Recent growth has underlined the organic momentum in the business, with Cavendish citing a 50% compound annual growth rate.
“Its business model looks very scalable, which should drive enhanced returns over the medium term. With its end markets having a favourable outlook and growth largely structurally driven at present, we believe this looks to be a very attractive growth story.”
Cavendish also predicted minimal competition on the horizon, given the high entry barrier on the construction recruitment sector.