Kier shares set to build bearish momentum ahead of full year earnings

• Kier Group set to unveil full year earnings on Thursday 17 September
• Bullish momentum will be ‘hard to muster’ for Kier shares, says IG analyst
• Kier Group share price slides 7% ahead of earnings after Covid-19 cases reported at site

Kier Group shares continue to struggle, with the stock sliding 7% on Tuesday, after five Covid-19 cases were reported at its site where it is working on the new Durham Country Council headquarters.

The company had begun to have some success with its turnaround strategy at the start of the year, with the stock, hitting a high of 149p in mid-February, up from a 77p a month prior in mid-January.

But the company, like so many others, saw its earlier gains utterly destroyed by the economic impact of the coronavirus pandemic.

Kier is trading at 51p per share at the time of publication, with the stock down 45% year-to-date.

Kier Group contemplates cash raise to offset Covid-19 impact

In a trading update earlier this year, Kier admitted that it may have to raise additional funds to strengthen its balance sheet amid the fallout from the coronavirus pandemic.

The company said that lower revenues had led to a lower-level of working capital inflow, with net debt for the financial year expected to hit £440 million. Investors will be interested to see what that final figure is later this week.

Kier has cut pay for more than 6500 employees across the board in an effort to reduce capital expenditure and has even put its housebuilding business, Kier Living, up for sale to reduce the amount of debt on its balance sheet.

‘As a result of Covid-19, over the next 12-18 months, further actions will be taken, including: continuing to implement a range of self-help measures, driving a further increase in the group's operating cashflows, continuing the process to sell Living and a potential equity issue,’ the company said.

And with coronavirus cases raising around Europe, investors are growing increasingly worried about a second wave and the prospect of additional lockdowns which would spell disaster for Kier.

Kier Group: technical analysis

Shares in Kier have hit new record lows this week, as sellers pile in, according to Chris Beauchamp, chief market analyst at IG.

‘The loss of the August 2019 low at 58.6p provided the catalyst sellers were looking for, and as a result the losses have come swiftly,’ he said.

‘This renewed downward move means that it will be hard to muster any bullish momentum.’

How to trade stocks with IG

Looking to trade Kier and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

1. Create an IG trading account or log in to your existing account
2. Enter ‘Kier Group PLC’ in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade