Broker says 'buy'.
Travis Perkins shares worth buying
Published: 04 December, 2009
LONDON: Brokers Collins Stewart is urging clients to buy Travis Perkins shares.
"Travis has maintained very high returns through the downturn. This has been driven by cost-cutting, focus on cash, solid market shares and pricing power. With the balance sheet re-capitalised and the worst part of the downturn seemingly behind us, we reiterate our 'buy' with target price 909p," it said.
But Collins Stewart warned that the sector still faces uncertainly in 2010. "UK house prices have bounced more than we expected over the summer.
"With elections looming and unemployment rising, we think that the recovery could be muted or even falter. Government spend in particular could come under pressure."
Collins Stewart said the national merchant is well placed and a double-dip recession could suit the company.
"The more painful 2010 becomes, the greater the chances of Travis carrying out value-creating acquisitions.
"A continuation of the recent stability would mean that the merchanting business – two-thirds of the Travis group – would follow DIY and start to show positive growth," said the broker.