Insider: a £100k bet on FTSE 250 stock at 18-month low

A multi-year rally has continued to unwind at this well-regarded mid-cap, but City writer Graeme Evans has spotted three directors piling in as analysts stick with lofty targets.

28th July 2025 07:51

Graeme Evans from interactive investor

Support for the cheapest Breedon Group (LSE:BREE) shares in over a year has come from the top of the building materials supplier after three directors spent £100,000 increasing their stakes.

The investments took place in the aftermath of Wednesday’s warning that economic headwinds are set to leave earnings for this year at the low end of the City’s forecast range.

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Chief executive Rob Wood said it had been a challenging first half but that the group is “optimally positioned” to benefit when construction market activity improves.

He highlighted structural long-term growth drivers in its three markets of Britain, Ireland and the United States, as well as significant reserves and a well-invested production capability.

The former Hanson executive, who joined the board in 2014 and took on his current role in 2021, backed up his comments by spending £49,300 on the FTSE 250-listed shares at a price of 359.8p - their lowest level since April last year.

The other buyers were Wood’s successor as finance chief James Brotherton and senior independent director Clive Watson after they each disclosed purchases of about £25,000.

Their turnaround optimism was echoed in the City after Berenberg and UBS retained Buy recommendations, but with lower price targets of 540p and 490p respectively.

Counterparts at Peel Hunt stayed at 565p. They said: “It’s not surprising to see some downward pressure on short-term forecasts, but the business remains in good shape.

“We think the drop in the share price year-to-date provides an attractive medium-term buying opportunity.”

Breedon moved to the main market in May 2023, having joined AIM in 2008 as a special purpose vehicle with the strategy of acquiring controlling stakes in the buildings materials industry.

In 2024, the group’s footprint consisted of more than 100 quarries, 200 ready-mixed concrete plants, 50 asphalt plants and two cement sites. It entered the US market last year with the acquisition of BMC and bought another Missouri based business in Lionmark earlier this year.

The infrastructure sector now accounts for about half of its customer base, with 20% being residential and 30% industrial and commercial.

Like-for-like revenues decreased by 3% in last week’s half-year results, reflecting the impact of challenging markets in Britain, project delays in Ireland and adverse US weather conditions.

Underlying pre-tax profits fell 20% to £48.9 million but confidence in prospects meant Breedon still increased its interim dividend for payment on 7 November by 6% to 4.75p a share.

It highlighted the UK government’s commitment to invest at least £725 billion into infrastructure over the next decade, including £39 billion into affordable housing. It said this should underpin future demand and its belief that 2024 will be the floor for volumes.

Breedon said its US business entered the second half with a healthy backlog and greater exposure to the growing and well-funded infrastructure market. It said: “We expect our US business will see further growth and margin expansion over the balance of the year.”

According to Deutsche Numis, Breedon trades on a forward price/earnings ratio of 11 times and dividend yield of about 4%.

The bank, which has a price target of 520p, said: “We view these as attractive valuation metrics given the group's growth opportunity. However, investors will likely want to see a stabilisation in short-term profitability in the first instance.”

You be the judge

A long-serving director of Judges Scientific (LSE:JDG) has spent £35,000 backing the rebound of the AIM-listed company’s shares following a profit warning on Thursday.

The group, which acquires and develops companies in the scientific instrumentation sector, has been impacted by reductions in US federal government research funding.

It added that several unrelated market and product-specific challenges at a handful of its businesses had affected performance.

Judges said a healthy order book and good cash generation gave it confidence the disappointing performance won’t hamper its strategy or ability to deliver “durable returns for shareholders”.

Shares fell 16% on Thursday as the board forecast earnings per share of between 285p and 330p in 2025, which compared with the City consensus of 367.2p.

Charles Holroyd, who joined as a non-executive director in 2018, bought his shares in the wake of the warning at 6,675p.

The stock, which listed on AIM at a price of 95p in 2003, had been 9,000p at the start of July following a recovery from 6,040p at the end of April.

Broker Panmure Liberum cut its price target from 11,000p to 9,000p, having lowered its earnings forecast by 22% for this year and 24% next year.

It said: “We expect the shares to come under pressure in the short-term, but the balance sheet remains strong and the acquisition strategy will be maintained.”

As we reported last month, Judges ranked as the top dividend payer in 30 years of the AIM market after distributing 832.2% of its initial share price.

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