Kingspan 'needs to go on €1bn buying spree' to boost share price momentum, according to broker

Building insulation specialist Kingspan will need to spend around €1bn on acquisitions over the next two years in order to maintain share price momentum, according to Davy.

The Cavan group’s shares have risen by 56% in the past 12 months, valuing the business at around €10.5bn.

“Kingspan’s valuation is stretched relative to the level at which it has generally traded,” said Davy analyst Flor O’Donoghue.

“Further M&A is the most plausible source of the additional earnings growth that would support the group’s valuation and maintain the stock’s momentum.

“We estimate investment of circa €500m per annum is probably needed. Although this looks high, we believe it is a credible level.

“Crucially, Kingspan has the financial capacity for this.

Kingspan last year added a small bolt-on in the UK, but also said it had capacity of around €600m to spend on acquisitions in a single year.

It failed with a €700m approach for the insulation division of Belgian company Recticel in 2018.