Shares of Kier Group plc (LON: KIE) edged 3.97% higher, bringing their total gains for the year to 15.2% as investors await a massive share issue expected to raise £150 million, which is more than the company’s current market capitalisation.
The construction, services and property company is also in talks to sell its Kier Living homebuilding division, with analysts expecting the sale to generate approximately £115 million.
Kier Group struggled over the past year due to the coronavirus pandemic’s impact, but its shares have picked up momentum since November and recouped a good chunk of its prior losses.
The potential for a significant rally in the future is relatively high. The company is expected to generate over £250 million in hard cash starting April when it announces the share offering to raise the initial £150 million.
The company’s shares are likely to spike higher after the share offering, given that it will be flush with cash if the share placement is successful. The fact that the funds raised will not be in debt will leave the company in a solid financial position.
The next price target for Kier Group shares is the 105p, after which they could rally up to the 150p level if everything goes as planned. The current price is quite attractive, given that it is near a support/resistance level.
However, nothing is guaranteed in the markets. We could quickly see the shares crash to their previous lows around the 40p level if investors react poorly to its half-year results set to be published in April alongside the share offer proposals.
Kier share price.
Kier Group shares rose 3.97% to trade at 91.6p, rising from Friday’s closing price of 88.1p.