Canaccord Genuity hikes target price for Ferguson, buoyant US housing key

By Alexander Bueso

Date: Thursday 24 Sep 2020

(Sharecast News) - Analysts at Canaccord Genuity hiked their target price for Ferguson, even while conceding that the macroeconomic outlook for 2021 remained "uncertain".
Indeed, 'macro risks' remained "delicately balanced", the Canadian broker also said.

And yet, a final dividend was likely to be declared on 29 September, when the specialist distributor of plumbing and heating products was scheduled to release its full-year numbers.

Analyst Aynsley Lammin said: "the US market "performed better than initially feared during H2, and the UK & Canada should also have seen a decent recovery post lockdown."

Hence, he bumped up his target price for the stock from 6,945.0p to 7,460.0p, but due to those macro risks kept his recommendation at a 'hold'.

The company's leverage was nevertheless expected to have remained "comfortably" below 1.0 times, commodity inflation "modest", and e-commerce growth "very good".

Furthermore, the shares were likely deriving valuation support from a strong US peer group and moves in foreign exchange,

"Longer term, the investment case is supported by its move towards becoming more US focussed but the share price has enjoyed a strong run recently and macro risks remain delicately balanced.

"We increase our price target to 7,460p (from 6,945p) but maintain our HOLD rating on valuation given the macro backdrop heading into 2021."


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