Panmure Liberum has reaffirmed its bullish stance on Galliford Try Holdings PLC (LSE:GFRD), maintaining a 'buy' rating and a price target of 480p following the construction group's latest results.
The brokerage believes the group's strong positioning, financial discipline, and cash-rich balance sheet set it apart in the UK construction sector, where optimism is not widespread.
The results for the first half of 2025 exceeded expectations, with fully diluted earnings per share (EPS) coming in 27% higher than forecast.
As such, Panmure Liberum has upgraded its EPS estimates for both 2025 and 2026 by 12% and 10%, respectively.
Galliford Try’s solid cash position remains a key strength.
The company reported an average net cash balance of £176 million for the period, the highest cash-to-sales ratio in the sector.
This financial stability gives it room for acquisitions, with a new revolving credit facility suggesting potential deals ahead.
The firm’s order book also looks robust, with 99% of contracts negotiated and just 1% awarded through single-stage tenders, reducing risk.
Infrastructure was a standout performer, with earnings before interest, tax, and amortisation (EBITA) growing by 32%, driven by strength in the water sector.
This segment continues to benefit from long-term government spending commitments, particularly through the AMP8 regulatory cycle, which ensures visibility on revenue streams for years to come.
Panmure Liberum sees Galliford Try as exceptionally well-placed to meet its 2030 financial targets, which include tripling EPS from 2023 levels.
The firm values its public-private partnership (PPP) portfolio at 39p per share, while its average net cash adds another 167p, implying that the market is undervaluing the company's core construction and infrastructure businesses.
At a current price of 381p, Panmure Liberum believes there is still room for upside, with the shares trading at 12.6 times 2025 earnings estimates.
PL argues that ongoing margin improvements, potential upgrades, and sustained strong cash generation should help close the valuation gap.
In afternoon trading, the shares, up 40% in the last year, were off 5% at 350p.