Kier Group shares stable. Where next amid challenging outlook?

The troubled construction services and property group have seen shares stabilised since falling more than 40% amid the Covid-19 crisis, with the business eager to cut costs to cope with market uncertainty.

Kier Group shares are stable but have been wallowing around 82p levels since April, with the company benefitting from its core construction and infrastructure businesses continuing to operate amid the Covid-19 crisis.

The company is responsible for maintaining the UK’s highways, schools hospitals and key repairs to the water, gas, power, telecoms and rail sectors, with its employees retaining their key worker status to continue carrying out these activities.

In a trading update, Kier said that its overall performance remains in line with expectations, with around 80% of its sites and workplaces running as normal.

However, its homebuilder business has been impacted, with work paused at its Kier Living sites until recently, with the UK government opting to begin reopening the economy by easing lockdown restrictions in May.

Kier closed at 1.8% higher at 82p share on Wednesday.

Kier ramps up cost-cutting measures

To mitigate the impact of the Covid-19 crisis, the company has expanded its cost saving programme and focused its attention on reducing its debt pile.

As it stands, the company’s net debt is in line with management’s expectations, with average month-end net debt at £396 million for the six months to 31 December 2019. Kier also said that it remains on track to deliver cost savings of at least £65 million for the financial year ending on 30 June 2021.

In order to deliver on its cost savings, around 6500 employees, including its executive committee and board of directors will all take a reduction of 7.5% - 25% of their base salaries between April and June.

However, the process to dispose of Kier Living and the evaluation of the options for its property business have both been paused until further notice.

Analysts remain optimistic about Kier Group

In the latest broker round-up in April, analysts from Peel Hunt and Liberum Capital reiterated their ‘buy’ rating for Kier.

Liberum Capital even upgraded its target price for the stock to 120p per share, implying a potential upside for the construction services and property group of 46%.

Whether the company is able to see its share price make those gains will depend heavily on the impact of the Covid-19 pandemic, with investors eager for and update on its performance when Kier unveils its full-year results in June.

How much does it cost to buy UK shares with IG?

There are three ways to ‘buy’ UK shares with IG: spread betting, trading CFDs or buying physical shares. The cost will depend on which method you choose. The table below illustrates how the costs to get exposure to £10,000 of Lloyds stock, which is equivalent to 16,000 shares (quoted at 62.5p a share).

Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.

Cost to get exposure to Lloyds stock

Spread betting CFD trading Share dealing
Action Buy £160 per point Buy 16,000 share CFDs Buy 16,000 shares
Capital required to open £2000 £2000 £10,000
Total fees £20.88 £20.88 £16

Ready to start trading shares? Open a live account or practise on a demo.

Note: Amounts do not include overnight funding charges and taxes. Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.