LONDON (ShareCast) - (ShareCast News) - SIG's rating was retained at 'buy' but its target price was lowered to 160p from 165p by Canaccord Genuity after the building products firm reported its full year results.
The group posted a 1.4% drop in revenue to £2.67bn on Wednesday, hurt by foreign exchange movements in Europe and weak trading.

Pre-tax profit increased 31.5% to £51.3m, but it reflected the previous year's profits being slashed due to costs associated with the disposal of businesses.

Chief executive Stuart Mitchell said that the company's full year had been "adversely affected" by market conditions. However, he said the company had taken steps to cut costs to support growth in 2016.

"While the group continues to face some challenges this year (minimal product price inflation, competitive backdrop and stretched balance sheet), we retain our Buy in view of an undemanding valuation and some offsetting benefits this year of currency gains, a good start to the year, cost savings and organic growth initiatives," said Canaccord analysts Aynsley Lammin and Matthew Walker .

"While we highlight the potential medium-term value in the shares, a sustained recovery in Europe and the UK, operating margins moving to over 4.5%, deleveraging and retaining more of the cost savings are required for the share price to see a sustained recovery."

The analysts said the target price was lowered due to higher debt levels than previously assumed. Net debt at 31 December 2015 increased to £235.9m from £126.9m in 2014.

Canaccord expects earnings per share of 12.2p and 14.0p for 2016 and 2017 respectively. The 2016 estimate was left unchanged from prior projections but the 2017 was down from the previous 14.3p expected.

Shares rose 0.66% to 138p at 1103 GMT.

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