U.K. broker Jefferies has reiterated its buy rating for rental equipment company Ashtead — Sunbelt Rentals’ parent company — one week before the company announces its full-year results, saying it sees “upside risk” to current-year forecasts.
Jefferies is expecting Ashtead to report a pre-tax profit of £121.1 million (about U.S. $188 million) for the fiscal year ended March 31, 2012, based on fourth-quarter assumptions of U.S. rental revenue growth of 13 percent year over year. Analysts said given United Rentals reported April 2012 rental revenues increasing 19.2 percent year over year, they believe the Ashtead fourth-quarter assumptions are conservative.
Jefferies analysts added that the ongoing structural shift to increased rental and less equipment ownership in North America, plus pricing recovery in rental rates, supports its view, with the likelihood of Ashtead gaining market share from smaller, more financially constrained competitors an additional factor.
Sunbelt Rentals, based in Fort Mill, S.C., is No. 3 on the RER 100, and is now the North American rental industry’s second largest company, with No. 2 RSC having been acquired by United Rentals. Ashtead, plc, is based in London.