Shares in Aggreko PLC (LON:AGK) rose 2.6% in early trade after Jefferies turned buyer.
The American investment bank moved it from ‘hold’ and increased its price target for the stock in the temporary generator specialist to £25 a share from 850p (current price 975p, up 25p).
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Jefferies reckons the Power Solutions Industrial arm is demonstrating “strong on-going momentum”.
So it expects the “swing factors” for earnings to be the Utility and Rental Solutions businesses.
Halting the negative earnings experience
“If the negative earnings momentum experienced over the last five years can be halted, then the shares should continue to react positively, especially considering a short base of 16% (55 days to cover),” Jefferies explained.
“Utility markets look in ruder health. End markets across the Utility landscape appear to be seeing an uptick in activity.”
In a note to clients, the house said the Rental Solutions market is “geared into a recovery in the US”.
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The third-quarter trading update on November 21 should give a view on the direction of travel of this part of the Aggreko business, Jefferies added.
It expects to see margin growth and the “outlook maintained”.
Of the six analysts logged as following Aggreko, only one other is in the ‘buy’ camp along with Jefferies; the other four have ‘sell’ recommendations. The consensus price target currently sits at 807p a share.