Citi says buy Travis Perkins on housing market revival
By Sean Farrell
Date: Thursday 20 Feb 2020
(Sharecast News) - Investors should buy Travis Perkins shares to capitalise on a revival in the UK housing market, Citi said as it upgraded its recommendation on Britain's biggest builders' merchants.
Citi analysts upped their recommendation on Travis Perkins shares to 'buy' from 'neutral' and increased their share price target to ?19 from ?17. They said Travis Perkins's businesses were better positioned to benefit from the improving housing market and improve market share.
"Strong price and demand momentum in the last two months shows signs of revival in the UK housing market following the recent election," Citi said. "The positive demand dynamics support expectations for sustainable volume growth across the business with earnings benefitting from higher operating leverage."
The analysts said Travis Perkins's management was disciplined about allocation of capital and that there was scope for higher returns to shareholders over the medium term. Travis Perkins's leverage target and positive demand offer scope for increased cash returns to shareholders from 2021 onwards.
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