Kingspan Group PLC (ISE:KRX) has been upgraded to 'buy' from 'hold' by Jefferies, which raised its price target to €140 from €103.90 and named the building materials group a sector top pick, citing accelerating data-centre exposure, stronger earnings growth and further acquisition potential.
The target implies around 38% upside from the €101.17 share price used in the broker’s analysis.
Jefferies expects Kingspan to deliver a 20.1% EBITDA CAGR between FY25 and FY28, compared with a 5.1% sector average, while sales are forecast to grow at a 14.5% CAGR versus 4.5% for peers.
Central to the investment case is Advnsys, Kingspan’s data-centre-focused division, which Jefferies expects to contribute around 47% of group EBITA by FY30, up from about 19% in FY25.
The recent BMC acquisition is also expected to lift margins, with Jefferies forecasting group EBITA margins above 12% from FY27, breaking out of the roughly 10%-11% range seen in recent years.
The broker increased its FY27 EBITA forecast by 14.3% to €1.50 billion and EPS estimate by 8.8% to €5.67, while FY28 EBITA is forecast at €1.74 billion.
Jefferies also sees scope for further M&A as leverage falls, while arguing Kingspan’s 11.6 times FY27 EV/EBITDA valuation does not fully reflect its growing data-centre exposure. European data-centre peers typically trade at around 15-20 times.
