Broker price target increases are worth looking out for. Generally speaking, when a brokerage firm raises its share price forecast on a company, it signals the firm believes that the stock’s prospects have improved. Here, I’m going to highlight two FTSE growth stocks that have recently had their price targets revised upwards by brokers. I think both of these shares look interesting right now.
Attractive medium-term outlook
First up is construction equipment rental company Ashtead (LSE: AHT), which is a member of the FTSE 100 index.
The broker activity I want to highlight here is a recent move by JP Morgan. On 30 January, its analysts – who have an ‘overweight’ rating on the stock – raised their target price to 6,800p from 5,600p, about 33% above the current share price.
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I can see why JP Morgan is bullish on this stock. Ashtead generates the bulk of its revenues in the US. And late last month, US rival United Rentals posted record results with revenue for the quarter up 13.5%. Guidance was ahead of forecasts.
Looking ahead, the future looks bright for Ashtead as a huge amount of funding for infrastructure projects is due to be released this year in the US. This funding should benefit the company.
It’s worth noting that Ashtead does have some exposure to the UK. And the construction market here has been quite weak. So this exposure presents a risk.
Overall however, I think the outlook for this stock’s attractive. The forward-looking P/E ratio of 14 seems very reasonable to me.
Phenomenal earnings growth
The second stock I want to discuss is FinTech company Wise (LSE: WISE). It’s not in the FTSE 100 but it’s a member of the FTSE Euromid index.
The broker activity here that’s worth mentioning is a recent upgrade by Jefferies. On 2 February, its analysts boosted the stock to ‘buy’ from ‘hold’. At the same time, they raised their price target to 1,024p from 717p. That’s about 24% above the current share price.
Now, I’ve always seen this stock as a little risky. I’ve had concerns around the lack of economic moat and the company’s high valuation.
But I have to say, it is growing on me. Recent results showed that the company has a lot of momentum right now.
On 16 January, it told investors its full-year income (for the year ending 31 March) is expected to grow between 42% and 44%, compared with its earlier forecast of 33-38% growth.
Meanwhile, return on capital – a key measure of profitability – is picking up dramatically. Last financial year, it came in at 25%.
Given this strong performance and high level of profitability, I’ve stuck the growth stock on my watchlist. I may invest in Wise at some point in the future.
