RBC Capital starts coverage of Keller at 'sector perform'
By Michele Maatouk
Date: Friday 10 Oct 2025
(Sharecast News) - RBC Capital Markets initiated coverage of Keller Group on Friday with a 'sector perform' rating and 1,540p price target.
It noted that since 2019, Keller has executed well, but said it thinks margins are reaching a structural ceiling.
"Transformational growth is the next step and while it has significant firepower to buy and build, it lacks a strategy," RBC said.
"Without a plan, US construction spend is the key earnings driver (81% correlation since 2006), which has a mixed near-term outlook.
"Given this backdrop, we think Keller should hold a CMD to provide 1) a clear steer on how and why margins are sustainable and 2) an above market growth strategy. Until this occurs, we think investors will remain on the sidelines."
RBC said the stock's valuation reflects low earnings growth and no growth visibility. The bank's target price is based on a 7x CY26e price-to-earnings multiple versus Keller's 8.2x 10- year average.
"We think a discount reflects Keller's low earnings growth, with a mixed outlook for US construction and limited upside to margins," it said.
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