Goldman Sachs raised its rating on Shanks to 'buy' from 'neutral' after the waste group's shares fell following its abandonment of talks with private equity group Carlyle about a possible offer.

The broker notes that Shanks trades at 8.9 times earnings, a significant discount to both the wider utilities sector, which trades at 12.3 times earnings, and its historical multiples of about 11.4 times earnings.

'Shanks is among the most economically exposed stocks in the utilities sector, as its business is 100% waste, of which around 85% is non-municipal (and so more sensitive to industrial production cycles),' the broker says.

'Our economists expect a rebound in industrial activity in Shanks' key markets (Benelux and the UK), which should drive strong earnings growth at the company. We would also not rule out the possibility of further M&A activity in the next 12 months.'

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Shanks Group (SKS) share price