Driver moves up another gear

Driver Group, the construction consultancy, has lifted profit guidance for the second time this year on the back of strong trading and an order book that is fit to burst.

Strong performances at its Middle East, Africa and UK Power divisions have persuaded the board to lift management expectations for the current financial year yet again, less than two months after it previously advised the market that the company was performing ahead pf expectations.

"The company is pleased with the continued progress being made as a result of the renewed focus of the business on its core competencies and in broadening its presence, both geographically and in the sectors it operates in within the UK.

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This has gone down rather well with investors, with the stock hitting a 52-week high of 46.5p in the morning trading session. Over the last 12 months the stock has risen by more than 150%.

"Two upgrades to FY [full year] expectations in the first six months of the year highlight the momentum within the business," noted Northland Capital Partners.

"Strategically, we believe, the management made the right decision to maintain a presence in the Middle East on the expectation of better trading conditions due to increased infrastructure spending this year. This is proving the case and has helped underpin the two upgrades to guidance since the start of the year. However, the improvement in other areas of the business should not be underestimated and credit needs to be given to the management for the turnaround across the business," the broker argued.

The shares are trading on 9.8 times consensus forecast earnings for fiscal 2013, prior to expected upgrades on the back of Thursday's pre-close trading update. The valuation does not look stretched, in Northland's view, taking into account the current earnings momentum.

House broker Charles Stanley has raised its fiscal 2012 profit before tax forecast for the second time in two months, by 15% to £1.5m. Market consensus for profit before tax prior to the trading update was £1.30m.

As might be expected of the house broker, Charles Stanley rates the shares a "buy", and has raised its price target from 45p to 49p.

JH