"Two of the three main markets served by Wolseley, non-residential and infrastructure, are still in decline and they account for around 50% of group revenues," the broker said.
Their view is that while the UK and US housing markets were showing signs of recovery, the picture in Europe, where the residential market accounts for more than 60% of Wolseley's sales, remains uninspiring.
"The most attractive of Wolseley's markets, is, in our view, UK housing, and we believe that exposure to a UK pure play house builder is a more attractive way to benefit from the housing recovery," the broker said. It moved Wolseley to "underweight" from "neutral", and helped Taylor Wimpey to rise by 3.7% or 1.28p to 36.14p and Persimmon to close at 446.8p, up 6.7p.
Wolseley also managed to clock gains, however, adding 39p to 1,724p as Citigroup reiterated its 'buy'" view and Cheuvreux switched its stance to 'outperform' from 'underperform'.