Broker tips: Ashtead, Hochschild
By Iain Gilbert
Date: Tuesday 29 Apr 2025
(Sharecast News) - RBC Capital Markets downgraded equipment rental firm Ashtead on Tuesday to 'sector perform' from 'outperform' and slashed its price target to 4,125.0p from 6,750.0p as it factored in a slowdown.
"We struggle to escape the conclusion that seismic changes in US economic policy are likely to lead to lower equipment rental demand over the next 12-18 months," the bank said. "Despite lowering revenue forecasts by just 6% and 13% for FY26 and FY27 respectively, our EPS estimates fall by 21% and 33% due to high operating leverage, compounded by financial leverage."
RBC said this leaves the bank around 25% below Visible Alpha consensus for FY26E and noted that this was partially reflected in the 18% share price decline year-to-date.
"The outlook for the US economy has deteriorated markedly since we upgraded AHT to outperform at the start of December last year," RBC said. "We thought the election of President Trump would usher in a sustained period of corporate confidence in the US, accelerating the end of the equipment rental industry's mid-cycle slowdown in response to tightening monetary policy.
"How wrong we were, for all the reasons well known to investors. We now assume a -5% correction in US rental-only revenue in FY26 (to April), comprised -10% in General Tool and +8% in the structurally more resilient Specialty activities, with an implicit assumption that AHT (and peers) remain disciplined on rental rates."
Analysts at Canaccord Genuity slightly lowered their target price on precious metals group Hochschild Mining from 370.0p to 365.0p on Tuesday following a "slower than expected" first half trading performance.
Canaccord Genuity said that despite a "solid production performance" from Hochschild's Inmaculada mine in Q125, its San Jose asset missed on grades and its Mara Rosa site missed on throughput. Despite the lower-than-expected production levels, Canaccord only made minor changes to its production profile in 2025 and now expects to see "a much stronger production half" in H2 than H1.
Notably, the Canadian bank said gold sales and gold realised prices also missed CGe in Q1, leading it to lower FY25 sales estimates by 3% and underlying earnings forecasts by 6% as a direct result. However, it have left its 2026 production and EBITDA unchanged.
"We have lowered our target price on HOC by 1-2% to 365p, from 370p previously. We are using an equal-weighted shorter-term EV/EBITDA multiple (4.0x) and a longer-term NAV (at 1.0x), both in line with other mid-cap gold peers like Pan African," said Canaccord, which reiterated its 'buy' rating on the stock. "However, we now see the HOC stock as having more 2H25 earnings and deleveraging momentum than 1H25"
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