Ashtead Group PLC (LON:AHT) shares dropped after Citigroup downgraded the stock to ‘neutral’ from ‘buy’ on valuation grounds.
Citi said the equipment rental group’s second quarter revenue and adjusted underlying earnings (EBITDA) were comfortably ahead of its expectations, driven by improvements in end markets and hurricane clean-up efforts in the US.
READ: Ashtead chairman to step down as it lifts full year outlook after hurricanes boost profits
Ashtead also expects earnings growth and free cash flow generation for “a number of years” and raised its net capital expenditure guidance for the year, Citi noted.
However, Citi said it prefers construction equipment rental company, BlueLine, on relative value.
Shares fell 3.40% to 1,990p in morning trading.