Aggreko upgraded to hold as Berenberg says impairment charge has rebalanced risk-reward profile

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Aggreko PLC (LON:AGK) has been upgraded to ‘hold’ from ‘sell’ by analysts at Berenberg, who said a GBP181mln impairment charge reported in the company’s interim results had removed most of a negative overhang and left a “more balanced” risk-reward profile for the shares.

In a note on Thursday, the broker also increased its target price for the supplier of generators and air conditioners to 410p from 350p, adding that “although much of this impairment relates to issues that have been weighing on the stock for a number of years, management judged that [coronavirus] was the final nail in the coffin for recovering any value”.

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“Further impairments may arise due to a potential worsening outlook, although the residual overhang from the emerging-market crisis of 2015/16 has now largely been lifted. This should help improve the returns profile”, Berenberg said.

The broker also said a “significant decline in consensus expectations” for the company and its enterprise value versus invested capital de-rating in the year to date had de-risked the expectations and “appropriately prices the challenges going forward”.

Shares in Aggreko rose 1.3% to 451.8p in mid-morning trading.

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