Shares in plant hire firm Ashtead surged on Tuesday morning after the firm raised its full-year guidance, leading broker Peel Hunt to upgrade its forecasts for the group.

Ashtead reported a pre-tax profit of £61.4m in the first quarter, up 82% year-on-year and well above Peel Hunt's £48.0m estimate.

"The Q1 performance demonstrates that pricing and volumes have continued their momentum and mirror the performance of peers. August trading has continued this trend," said analyst Andrew Nussey.

The broker has hiked its full-year pre-tax profit estimate from £160m (consensus: £162m) to £185m and raised next year's estimate from £185.6m (consensus: £189m) to £208.0m.

On Peel Hunt's revised estimates, Ashtead trades at 12.1 times prospective earnings per share, equal to 4.8 times earnings before interest, tax, depreciation and amortisation (EBITDA), compared with a historical mid-cycle range of 5-6x.

"Given this early stage of the recovery, we see further outperformance from re-rating as well as scope for further positive earnings surprises," Nussey said.

The broker has maintained its 'buy' rating and 320p target price for the stock.

By 11:44, shares were trading 11.26% higher at 314.31p.

BC

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