Deutsche Bank downgrades Ashtead to 'hold'

(Sharecast News) - Deutsche Bank downgraded its stance on equipment rental firm Ashtead on Monday to 'hold' from 'buy' as it said the stock was trading close to its 6,500p price target. The bank said it remains positive about the long-term prospects for Ashtead, which is the second-largest equipment rental operator in the US.

It said Ashtead benefits from a structural shift from buy to rental and it believes the larger sector operators will benefit from scale and high service levels to customers.

"It could also benefit from an acceleration in re-shoring activity as a result of Trump presidency," DB said.

As far as the valuation is concerned, DB noted the shares are trading on a calendar 2025 estimated price-to-earnings of around 18x and EV/EBITDA of 8.1x.

"Following a recent increase, the shares are trading close to our target price and we lower our rating to hold from buy," it said.

Deutsche said downside risks include a loss of key management, a more challenging period of construction activity, greater competition and an inability to recruit skilled labour.

Upside risks include an improvement in non-residential markets and an acceleration in broader re-shoring activity.