FTSE 250 shares round-up: Breedon, Ibstock among top mid-caps
Of the dozen or so companies putting in big gains on the mid-cap index during Wednesday’s session, this pair stand out. City writer Graeme Evans reveals why they’re flying.
5th March 2025 15:50
by Graeme Evans from interactive investor
Construction industry suppliers Breedon Group (LSE:BREE) and Ibstock (LSE:IBST) today helped to ensure the swift return of the FTSE 250 index above 20,000 as mid-cap investors got a much-needed boost.
A dozen stocks reached mid-afternoon up by 5% or more, including recovery sessions for Aston Martin Lagonda Global Holdings Ordinary Shares (LSE:AML), Ocado Group (LSE:OCDO), Wizz Air Holdings (LSE:WIZZ) and the recruiters Hays (LSE:HAS)and SThree (LSE:STEM).
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The buying, which also included strong demand for Computacenter (LSE:CCC) and QinetiQ Group (LSE:QQ.), followed a reverse for the FTSE 250 from 20,881 in mid-February to last night’s 19,950.
Construction materials firm Breedon led today’s strong mid-cap session as shares jumped 54p to 481.5p thanks to forecast-beating annual results and another major US deal.
Exactly one year on from its entry to the US market with the acquisition of BMC, Breedon is buying another Missouri-based business with the addition of Lionmark.
The move, which comes with an enterprise value of $238 million (£187 million) gives Breedon exposure to the US asphalt and surfacing market.
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Analysts at Goodbody said the deal increased the total US share of earnings from 11% in its current 2025 estimates to about 19%, adding that the additional US infrastructure exposure should be highly valued by the market.
Annual revenues rose 6% to £1.6 billion in 2024, with the US diversification helping to offset “significant market headwinds” in Britain as well as poor weather conditions. Pre-tax profits rose 4% on an underlying basis to £150.8 million.
Breedon is optimistic that 2024 should represent a floor in construction market activity in the UK, while conditions in Ireland remain supportive. The company adds that its M&A pipeline is well populated.
Chief executive Rob Wood said “Entering 2025 we have three strong platforms, a first-class team, an abundance of opportunity and our markets are poised for recovery.”
The shares rose 23% in 2024 but had drifted prior to today’s rebound, leading to a multiple of about 11.5 times forecast 2025 earnings.
Peel Hunt said: “Given the upgrades and our belief the business remains well run and will be able to continue expanding its geographic footprint in the US, multiples continue to look too low.”
The broker has an Add recommendation and target of 500p, while Deutsche Numis is at 520p.
Ibstock, a leading UK provider of bricks and other building products, rose 11.95p to 164.35p as it said recent strategic initiatives left it well placed for a recovery in housing starts.
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Results for 2024 showed a 10% drop in revenues to £366 million but demand improved as the year progressed, with second-half sales up 3% on 2023 and 6% ahead of the first half.
Adjusted earnings of £79 million fell 26%, a decline in line with company and City expectations as 2023’s margin of 26.5% reduced to a “robust” 21.7%. A final dividend of 2.5p a share is due for payment on 30 May, leaving the total for the year 3p lower at 4p.
With a capital investment programme substantially complete, Ibstock said it has lower cost and more efficient capacity in place to respond to increases in housing market activity.
It points out that its upgraded clay factory network can operate at roughly double the levels of brick output delivered in 2024. The company described trading so far in 2025 as solid, with momentum forecast to build throughout the year.
Peel Hunt, which has a price target of 190p, said: “Ibstock has prepared itself well for the housing recovery when it comes.
“The new plants give it the potential to grow volumes materially at lower costs from the 2024 low point. Operational gearing should see profits jump sharply over the medium term.”
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