Shares of Keller Group (LSE:KLR) dropped over 3% after Deutsche Bank downgraded the stock from “buy” to “hold,” reflecting concerns that the company’s strong investment momentum may be nearing its peak. The bank also reduced its price target from 1,800p to 1,660p, while Keller’s stock had closed at 1,434p the previous day.

Analyst Jonathan Coubrough noted that Keller’s financial transformation over the last five years has been impressive, driven by effective management and consistent earnings upgrades. The company’s share price has doubled since late 2023, supported by a 7% EBIT margin in FY24—40% above its 10-year average—and a return on capital employed of 28%, nearly double its historical norm.

However, concerns have emerged due to a significant double-digit decline in group profits during the second half of 2024. Guidance suggests a return to the company’s typical second-half earnings weighting in 2025, implying a year-on-year earnings decline for the first half. Achieving full-year consensus forecasts will depend on a strong rebound in the second half of the year.

This outlook raises questions about near-term earnings growth, contributing to the cautious stance from Deutsche Bank.

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