Banks upbeat about merchant performance
Published: 15 January, 2010
LONDON: Bank Credit Suisse offered an upbeat assessment of Travis Perkins shares. It upgraded the merchant to "outperform" from "neutral" with target raised to 972p from 830p.
"We expect total sales growth of 8%, in contrast to the consensus forecast for 0% growth. In addition to our organic volume growth forecast of 3% we expect the group to start capitalising on its robust balance sheet with a moderate amount of acquired growth," it said in a note to clients yesterday.
Credit Suisse thinks further upside is limited for the next few months on other building materials sector performers and cut its stance to "market weight" from "overweight".
"We believe that the sector fairly reflects the prospects for moderate volume and margin improvement in 2010, while the risks of delayed recovery in volumes, a sharp increase in energy costs or a deteriorating pricing environment remain," it said.
Its view on UK-listed players is mixed: Kingspan is downgraded to "underperform" from "neutral" with price target dropped to Ű4 from Ű5.4, but it keeps Ireland's CRH as "outperform" and still sees 23% upside potential to its new Ű22 price target, cut from Ű23.