Vp PLC (LON:VP.) is trading below its pre-Coronavirus share price even though the specialist tool and equipment rental company has recovered most of the revenues lost during the pandemic, said analysts at Berenberg.
It initiated coverage of the equipment rental specialist with a ‘Buy’ rating and 1,310p price target, implying 47% upside.
“With its longstanding management team and strong focus on ROACE (returns on average capital employed), the business has achieved an annualised TSR of over 17% over the past 20 years,” Berenberg said in a broker note.
“In spite of this, and the fact that the business exited March 2021 trading at 95% of pre-COVID levels, Vp currently trades 14% below its pre-pandemic share price, and at a potentially single-digit P/E (9.4x March 2023).
“We consider this a material mispricing, and expect Vp to significantly outperform over the short and longer term.”
Vp has a number of businesses, including Brandon Hire Station, which supply rental equipment to the construction, housebuilding and industrial sectors.
“Vp’s revenue recovery is underpinned by strong end-market outlooks. 85% of revenues derive from the UK infrastructure, construction and housebuilding sectors, each of which has strong lead indicators, in our view,” analysts said.
It said it also expected Vp to continue its strong record of mergers and acquisitions.