Balfour Beatty plc (LSE:BBY) has received a significant vote of confidence from Deutsche Bank, which lifted its price target to 1,100p from 990p following a strong set of first-half results.
Deutsche Bank maintained its Buy rating on the infrastructure and construction giant, with analysts pointing to power growth running ahead of expectations and improving contributions from the US construction business.
DB analyst Jonathan Coubrough highlighted the end of Balfour Beatty’s Military Housing monitorship as a key development, removing a cost overhang that had weighed on the group’s portfolio value.
The removal of that monitorship could allow the group to extract greater value from its existing portfolio, a development that analysts view as a meaningful positive catalyst for the stock.
Deutsche Bank raised its earnings forecasts by around 5%, alongside higher cash expectations, feeding through to an 11% increase in its sum-of-the-parts valuation for the company.
“We expect Balfour Beatty to continue to offer one of the best total shareholder returns in our coverage,” Coubrough said, forecasting a 9% compound annual increase in pre-tax profit over three years alongside a 7% distribution yield.
Balfour Beatty raised its full-year profit guidance after its loss-making American construction arm swung back into the black during the first half of 2026.
The company now expects low double-digit percentage growth in profit from operations at its earnings-based businesses, upgraded from previous guidance of high single-digit growth.
The group also lifted its average net cash guidance by £200 million to a range of £1.5 billion to £1.7 billion, and raised expected net finance income to between £35 million and £40 million, from a prior range of £28 million to £32 million.
The guidance upgrade was underpinned by the US construction division, which delivered £22 million of underlying profit in the six months to June, compared to an £11 million loss a year earlier.
That turnaround was driven by growth in the buildings business, which serves data centre and commercial customers, alongside reduced losses in the civils division covering roads and bridges operations.
The civils unit has weighed on group performance for several years, making the narrowing of losses there a particularly significant milestone for management and investors watching the stock closely.
