H&E Equipment Services (NASDAQ: HEES) is rising over 5% today on the back of an upgrade from Neutral to Buy at UBS. The firm also raised its price target to $41.00 (from $29.00), which reflects strong earnings growth ahead .
Analyst Steven Fisher said, “HEES is an earnings growth story; we forecast EPS will nearly double by 2016. HEES is uniquely positioned to benefit from the energy renaissance and impending capex investment, as 52% of HEES’ revenues are generated in the Gulf Coast region. Beyond Gulf Coast momentum, our bullish view on HEES is driven by a combination of favorable, late-cycle crane exposure, a secular shift toward equipment rental vs. ownership of equipment, and an improving North American economy. We forecast a 5% increase in non-residential construction will be a tailwind for HEES. Additionally, we see deleveraging as an earnings tailwind.”
The firm raised forward EPS estimates, largely reflecting increased rental fleet
growth. They forecast 2015/16 EPS of $2.00/$2.45, up from $1.80/$1.92 previously. 2014 EPS of $1.55 is unchanged.
