Davy ‘excited’ by long-term potential at Kingspan

Davy Stockbrokers has upgraded its earnings forecast for Kingspan by 2 per cent for 2018 on the back of better-than-expected first-half results, citing "exciting" long-term potential for the group.

On Friday the insulation manufacturer said sales rose 15 per cent in the first half to top €2 billion for the first time, helped by a pick-up in the UK market.

Responding to this, Davy has now lifted its underlying earnings per share forecast to 188 cent for this year, and 215 per cent for 2019, noting it is “well on course” to deliver double-digit earnings growth each year this decade, or more specifically growth of 13 per cent for this year and 15 per cent for 2019.

While the broker said that Kingspan remains “in great shape”, it noted that the real potential lies around the group’s longer-term opportunities.

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“What is particularly striking is how the group’s ambitions are more than ever global and multifaceted. Regardless of its dynamic growth in recent years, Kingspan is arguably still at the relatively early stages of its journey. Continuing delivery will sustain the group’s premium multiple and its share price outperformance,” analyst Flor O’Donoghue wrote.

The broker now believes that Kingspan “has some distance to travel before the business starts to mature”, pointing to opportunities across product development, capacity expansion, growth in regions where its products are underpenetrated, expansion into new regions, such as India and scope to fill existing coverage gaps, such as insulation boards in North America.