Shares of H&E Equipment Services surged Monday on expectations results will be boosted by a strong demand for its cranes and its presence in the Gulf Coast region.
Banc of America Securities analyst Seth Weber upgraded his rating on shares of the industrial machinery rental outfit to "buy" from "neutral," highlighting the stock's 15% decline since the start of the year.
"We expect H&E to recover from recent lows on evidence of continued strength of its non-residential construction markets," Weber wrote in a note to clients.
"H&E is a well positioned non-residential construction play, given its participation in the late-cycle crane segment, footprint, and a secular shift to the rental channel."
Weber said H&E's crane segment accounts for an estimated 30% of revenue.
At the same time, the company's Gulf Coast presence provides possible additional opportunities for petrochemical, oil patch and hurricane reconstruction activity, the analyst said.
Weber maintained his earnings estimates and $29 price target on the stock, but added that a reacceleration of Gulf Coast reconstruction funding efforts could boost the company's future results.