On Wednesday, Goldman Sachs revised its stance on Ashtead Group Plc (LON:AHT:LN) (OTC: ASHTY), downgrading the stock from Buy to Neutral. The firm also reduced the price target to GBP66.00 from GBP73.50. This decision came in response to Ashtead's second-quarter fiscal year 2025 results, which fell short of expectations in terms of revenue and profits. Additionally, the company adjusted its forecast downwards for the year, particularly concerning U.S. rental revenue growth.
The downgrade follows a pattern established in the previous fiscal year when expectations were also tempered. Goldman Sachs pointed to the persistent uncertainty surrounding Ashtead's revenue streams, attributing this to the weakening local commercial construction markets and the impact of rising interest rates. Ashtead has indicated that it does not anticipate a rebound in this sector until the latter half of 2025.
Goldman Sachs' outlook for Ashtead extends beyond the current fiscal year. The firm has decreased its revenue and earnings per share (EPS) estimates for fiscal years 2025 and 2026 by 5% and 13%, respectively. This adjustment reflects the anticipated challenges Ashtead may face in achieving revenue growth due to the current market conditions.
The investment firm's analysis suggests that the combination of Ashtead's recent financial performance and the broader economic factors could dampen the company's growth prospects in the near term. This recalibration of expectations by Goldman Sachs aligns with the latest financial data and market trends affecting Ashtead Group Plc.
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