The Swiss bank also raised its price target for the FTSE 100-listed firm to 1,800p from 1,700p, with the stock currently changing hands at 1,814.50p, up 3.5% on Monday’s close.
In a note to clients, the UBS analysts said: “Although Ashtead's performance has been significantly ahead of our original Sell thesis the shares have fallen c35% since early-cycle data started to deteriorate in Aug-18.”
They pointed out that risks appear to be rising, with predictions of a shallow industrial downturn ahead similar to that seen in 2015/16, and evidence of weakening rental demand and rising supply.
The analysts said: “Ashtead continues to take share and drive penetration gains, but we expect underlying volume growth to slow into high-single digits over the next 12mths”.
However, they added, given the de-rating by Ashtead to a Price Earnings (PE) of around 9 times, in line with the 2015 trough, the risk/reward for the stock looks balanced.
The analysts forecast that a deeper downturn could see Ashtead shares drop by 27%, while a more limited impact of economic disruption could see the stock jump 34%.