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 (FY) results in June.

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

There is one way to ‘buy’ UK shares with IG: trading CFDs. 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, CFDs are derivatives, which come with higher risk and reward than investing.

Cost to get exposure to Lloyds stock

CFD trading
Action Buy 16,000 share CFDs
Capital required to open £2000
Total fees £20.88

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


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change
-
-
-
-
China 300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.