Kingspan Group PLC (EURONEXT:KRX) has been upgraded from 'neutral' to 'buy', with Citi lifting its price target from €83 to €89, on the view that two major growth plans could significantly boost the company’s value.
Over the next five years, Kingspan aims to expand its Data Solutions and US Roofing businesses, areas the bank believes could together add about €40 to the share price, or more than 50% upside from today’s level.
The estimate is based on the extra profit these expansions could generate, compared with Kingspan’s typical long-term valuation history.
Right now, the shares trade at a lower multiple of earnings than they have on average over the past decade, which analysts see as leaving plenty of room for growth.
Citi argues this gives investors a relatively low-cost way to gain exposure to two fast-growing markets: the booming US roofing sector and the global surge in demand for data centres.
The shares rose 1.5%.