17.01.2025
Last Thursday we highlighted the attractions of Galliford Try (LON:GFRD), the UK construction group, at 363p.
That feature was ahead of the company publishing its Interim Trading Update, which it did on Wednesday.
The investor and market reaction to the statement was quite positive, lifting the shares from 361p to 382p on Wednesday, then up to 393p yesterday.
The group, which operates as Galliford Try and Morrison Construction, carries out building and infrastructure (environment and highways) projects with clients in the public, private and regulated sectors across the UK.
Trading Update
Ahead of its Interim Results being published, on Wednesday 5th March, the group updated the market, noting that in the first half it had performed well, winning a number of key projects and places on strategic frameworks.
Furthermore, the business continues to make good progress against its ‘Sustainable Growth Strategy to 2030’ strategy.
Trading is ahead of expectations with revenue and profit before tax for the full financial year now being expected to be at the upper end of current market estimates and was reflecting continued progress towards its margin targets.
The group has increased its Order Book to £3.9bn (£3.7bn), mainly in long-term frameworks, giving good visibility going forward.
It also has a good pipeline of future opportunities.
Management Comment
CEO Bill Hocking stated that:
"Our strong performance in the first half of the financial year provides increased confidence for the full year.
We are pleased with our successes on the new AMP8 frameworks and the opportunities we see across all our chosen sectors.
We have excellent people and project teams, a strong balance sheet and a high-quality carefully selected order book.
Encouraged by our performance in the first six months of the year and the robust outlook, our expectations for the full year to June 2025 have improved accordingly."
Analyst Views
At Panmure Liberum, the trio of analysts – Joe Brent, Adrian Kearsey and Sanjay Vidyarthi, following the update, have upped their Target Price for the group’s shares from 415p to 430p.
For the current year to end-June 2025, they estimate sales of £1,835m (£1,773m), with pre-tax profits increasing to £36.0m (£32.7m), with earnings of 26.3p (26.7p) and a dividend of 14.6p (15.5p) per share.
For the next year they see £1,884m sales, £38.4m profits, earnings of 28.4p and a 15.8p per share dividend.
Their estimates for 2027 are for £1,936m sales, £42.2m profits, 31.2p earnings and a dividend of 17.3p per share.
Over at Cavendish Capital Markets, analysts Max Hayes and Guy Hewett are looking for 527p per share as their Price Objective based very much on the group’s 2030 Strategy.
They are more bullish on their adjusted pre-tax profit estimates, going for £37.2m, £41.8m and £47.8m for 2025, 2026 and 2027 respectively, with earnings of 27.0p, 30.8p and 35.3p per share for those years.
In My View
Even though this group’s shares have risen well over 50% in the last six months, now at 393p, valuing the whole group at just £388m, I see them going even higher still, with them soon to be trading in the 430p/450p range, which would be up to new all-time Highs.
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