Earlier this week, the contractor and support services specialist reported that interim underlying earnings declined by 66% after major problems in UK construction and mining projects in Australia.
In a seachange in its opinion, Liberum now believes that 2013 is becoming increasingly irrelevant for the struggling builder even though it admits there could still be a full year dividend cut and further reductions in its earnings estimate.
It argues the focus will soon move onto 2014, where it has increased its earnings forecast by EPS by 20%
“Analysts have capitulated just when discontinueds and kitchen sinking make future profits more achievable,” it said.
The shares offer some of the best margin recovery potential in the sector, and exposure to the early cycle US," it added.
Adding that the market “loves a recover story,” the broker said that the buffeting following the interims means the shared are now cheap enough to buy.
Liberum has switched its rating to 'buy from sell', while the price target rises to 250p from 190p.
Shares today rose 6% to 239p.