Hochtief AG, the German builder controlled by Spain’s Actividades de Construccion y Servicios SA, jumped to the highest level since March after Goldman Sachs Group added the company to its “conviction buy” list.
The shares climbed as much as 4.4 percent to 47.49 euros in Frankfurt trading, and traded 4.3 percent higher as of 11:04 a.m. That extends the gains this month to 7.9 percent and values the company at 3.6 billion euros ($4.8 billion). The 148,235 shares traded after two hours represent 93 percent of the three-month average.
Hochtief, whose historic projects include Frankfurt’s Commerzbank Tower, once Europe’s tallest building, is benefiting from an industry upturn that has resulted in a 12 percent gain in the Stoxx 600 Construction and Materials Index over the past year. Marcelino Fernandez Verdes, the former head of ACS’s construction business who became Hochtief’s chief executive in November, is scheduled to present a plan to increase profitability and reduce participation in high-risk projects on Feb. 28.
“Hochtief has rallied since the new CEO was announced in November, but with the rest of the sector up, we believe Hochtief can go further,” Goldman said in a research note today. “While execution will likely take time, we believe clearer goals could increase investor interest.”
Profitability at the Essen-based company may be boosted by anticipated process improvements in the coming years, Goldman said. The investment bank previously rated Hochtief stock at neutral.