Deutsche Bank has reiterated its 'sell' rating on Travis Perkins, the builders' merchant and home improvement group, ahead of a third-quarter trading update next week, warning that end-market conditions remain weak and forecast risk persists.
Analyst Ben Wild kept his price target at 550p, below the current share price of 572.5p, citing soft demand across the group's key markets and no sign of meaningful recovery.
Government data from the Ministry for Housing, Communities and Local Government showed July brick deliveries in the UK fell 10% year on year, the weakest reading in the series' more than 40-year history.
Wild noted that commentary from Travis Perkins' suppliers and competitors suggests conditions have neither materially deteriorated nor improved through the third quarter.
The broker said its focus for next week's update will be on whether the gross margin momentum that drove a first-half beat has continued into the third quarter, and whether there are any signs of demand destruction emerging as a result of ongoing pricing pressure.
Deutsche Bank said it views adverse demand and supply dynamics in the UK merchant sector as a structural headwind that continues to create downside risk to consensus forecasts.
