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Morgan Sindall’s share price has faced challenges in 2022 due to rising business costs. The stock fell to a low of 1,335p on October 24, roughly 50% below its highest point this year. Currently, it is trading at 1,600p, which is about 20% above its lowest level this year, giving the company a market cap of over £750 million.
Morgan Sindall is a prominent player in the construction and regeneration sectors, operating several brands such as Morgan Sindall Construction, Morgan Sindall Infrastructure, BakerHicks, Property Services, Morgan Lovell, and Overbury. Its regeneration business includes brands like Lovell and Muse Developments. Some of its major projects include A41 improvements, Heathrow Airport, and Welsh Water.
The share price has been in a downtrend this year due to rising costs associated with energy, wages, and other construction inputs. However, despite these challenges, the company has performed well in 2022. In the first half of the year, total revenue increased from £1.55 billion in 2021 to £1.69 billion in 2022. The operating margin slightly narrowed from 3.5% to 3.4%, while profit before tax increased slightly to £54.6 million.
The company’s growth was driven largely by its urban regeneration business, where revenue surged by 85%. The fit-out segment saw a 20% increase in revenue, while property services grew by 10%. However, revenue from construction and infrastructure declined by 1% to £764 million. The company reported cash reserves of about £264 million, down from £294 million in the same period in 2021.
A key concern for Morgan Sindall’s share price is the outlook for the British economy, which is expected to remain in recession for some time. Additionally, Prime Minister Rishi Sunak’s government has announced plans to reduce infrastructure spending in the coming years, potentially leading to lower demand for Morgan Sindall’s infrastructure contracts.
On the technical side, the daily chart shows that Morgan Sindall’s stock price dropped to a low of 1,335p in October. Since then, the stock has rebounded strongly, moving above the 25-day moving average. The Relative Strength Index (RSI) indicates a bullish trend, and the stock appears to have formed a small inverted head and shoulders pattern. It is also exiting the Ichimoku cloud level, which often signals a bullish trend.
As a result, the stock is likely to continue rising, with buyers potentially targeting the next key psychological level of 1,800p. A stop-loss for this trade would be set at 1,550p.