LONDON (ShareCast) - (Sharecast News) - Analysts at Canaccord Genuity slightly lowered their target price on shares of builders' merchant and home improvement retailer Travis Perkins from 1,720.0p to 1,700.0p on Wednesday but stated that a "simpler and more coherent future" still awaited the group.
The broker pointed out that Travis Perkins was continuing to pursue its simplification and trade-focussed agenda, with its recent results" broadly as expected" and free of "surprises".

Canaccord also said it was "encouraging "to see a better performance in merchanting and good growth being delivered by the Toolstation brand. It also expects the Wickes demerger to happen in the second quarter, but it noted that it may "take a while" for its plumbing and heating unit to be sold for a reasonable price, especially given recent macro/coronavirus developments.

"We continue to feel more excited about what the group will look like in the medium term but trading is yet to improve and the macro uncertainty has increased which may further subdue near-term activity," said the analysts.

"However, the prospect of demerging Wickes, further strengthening the balance sheet with the sale of P&H and a trade-focussed business potentially enjoying some decent volume growth is an attractive one."

It also expects underlying profits to be "marginally up" this year and tweaked its underlying estimates, pre-tax profit estimates and earnings per share estimates on a full IFRS 16 basis. The analysts stated "flattish profits" on a comparable basis seemed to be "a reasonable view" for 2020 and now expects underlying earnings per share of roughly 114p - a 1% increase post-IFRS 16.

Canaccord also maintained its 'hold' rating on Travis Perkins.

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