Ashtead: New Financial Targets Unveiled Are Achievable; Raising Our Fair Value Estimate

Ashtead unveiled its new financial targets for the next five years, having comfortably achieved its revenue forecasts provided in fiscal 2021. We believe its path to $14 billion of rental revenue by 2029 will also be comfortably achieved, given its short-term and long-term growth drivers. We raise our fair value estimate to GBX 5,300 from GBX 4,550, which is underpinned by an increase in our Stage II growth assumptions and a 130-basis-point increase to our average EBITDA margin estimates. Store expansion remains a crucial part of Ashtead’s growth equation and will keep capital expenditure spending elevated for the foreseeable future, reiterating the capital-intensity of the business. We view shares as fairly valued.