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Investment recommendations for Keller suggest growing market confidence

Business analysis firm Berenberg Research has issued a recommendation to invest in Keller Group shares, suggesting that the global recovery in the ground engineering market is gathering some pace.

Berenberg’s independent research suggests that Keller could reach a target price of £14, which is 18% higher that its market close price of £11.84 at the end of last week.

According to the report, the confidence is based on Keller operating in a “small, niche sub-sector that is arguably growing faster than the broader construction market because of more ambitious development and infrastructure projects along with greater pressure to build on more marginal/brownfield land”.

Berenberg’s investment case is based on recovery in the US construction market and the company’s global presence “gives exposure to a European recovery and longer-term opportunities in Australia and Asia”. The report continues: “While the European construction markets remain very difficult due to still-weak demand combined with high levels of competition, there look to be some green shoots. Furthermore, Keller is playing a role in a series of major energy and infrastructure projects in Australia and Asia”.

Keller’s acquisition history also adds to Berenberg’s confidence. The report states: “Keller’s management is not afraid to make acquisitions where it sees opportunities. This was illustrated by the acquisition of North American Piling in 2013, funded by equity. With healthy free cash flow supporting deleveraging, we think other value-accretive deals are likely”.

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