Goldman Sachs raised its rating on Shanks to 'buy' from 'neutral' after the waste group's shares fell following its abandonment of talks with private equity group Carlyle about a possible offer.
The broker notes that Shanks trades at 8.9 times earnings, a significant discount to both the wider utilities sector, which trades at 12.3 times earnings, and its historical multiples of about 11.4 times earnings.
'Shanks is among the most economically exposed stocks in the utilities sector, as its business is 100% waste, of which around 85% is non-municipal (and so more sensitive to industrial production cycles),' the broker says.
'Our economists expect a rebound in industrial activity in Shanks' key markets (Benelux and the UK), which should drive strong earnings growth at the company. We would also not rule out the possibility of further M&A activity in the next 12 months.'
Stockbroker tips from ShareCast
Broker snap: Goldman upgrades Shanks
Recent articles
-
Broker tips: Land Securities, Autonomy, Immunodiagnostic Systems
Mon 19 July 2010 13:58 -
Broker snap: Immunodiagnostic Systems has legs
Mon 19 July 2010 13:57 -
Broker snap: Land Securities 'good value'
Mon 19 July 2010 13:36 -
Broker snap: Autonomy still out of favour at KBC
Mon 19 July 2010 11:04 -
Broker snap: IG ripe for profit-taking
Tue 20 July 2010 11:06
Stockbroker tips: Most read
-
Broker tips: William Hill, Autonomy, IG
Tue 20 July 2010 11:37 -
Broker tips: Land Securities, Autonomy, Immunodiagnostic Systems
Mon 19 July 2010 13:58 -
Broker tips: ARM, Rathbone Brothers, Connaught
Wed 28 July 2010 13:25 -
Broker tips: Reckitt, Pace, RM Group
Mon 26 July 2010 12:16 -
Broker tips: Johnson Matthey, Reckitt Benckiser, Euromoney
Wed 21 July 2010 12:39
Market latest
| FTSE 100 | 5,258.02 |  |
-1.06% |
| FTSE 250 | 9,948.72 | |
-1.26% |
| FTSE All Share | 2,715.36 | |
-1.07% |
| Dow Jones | 10,465.94 | |
-0.01% |
| NASDAQ | 2,254.70 |  |
+0.13% |
| Nikkei 225 | 9,537.30 | |
-1.66% |
| Hang Seng | 21,029.81 | |
-0.30% |
Prices delayed by at least 15 minutes.
Related quotes
| Shanks Group plc | 104.50p | +0.30p |
Related articles
London close: Footsie back above 5,300
22 Jul, 2010London afternoon: Advance stalls
22 Jul, 2010London midday: Morning ends on a high
22 Jul, 2010Shanks on course for FY
22 Jul, 2010Shanks on course for FY
22 Jul, 2010
No news or research item is a personal recommendation to deal.