Builders’ merchant Travis Perkins (LSE:TPK) PLC is set to release its full-year (FY) 2022 results on February 28, and analysts at Citi expect cost reductions to partly mitigate broader volume headwinds, providing a supportive outlook for the company.
The American bank also expects a resilient demand backdrop for repair and maintenance, infrastructure, and public works, as well as energy efficiency-driven refurbishments. However, new build volumes are likely to be weaker at higher rates.
With investors remaining cautious due to concerns of downside risks to estimates from a weak macro-economic backdrop, commentary around cost optimisation measures should improve sentiment on the stock, Citi added.
According to consensus forecasts, Travis is expected to see revenues grow by 10% to £5bn, while pre-tax profits are expected to drop 10.5% to £273.6mln.
In broader house building commentary, the UK housebuilders and building products sector have had a good start to the year, driven by improving sentiment and expectations of a soft landing, Citi’s note suggested.
However, the sustainability of the near-term strength relies crucially on the outlook of mortgage rates and house prices, it added.
As the spring season approaches, the gap between achieved and asking prices will be closely monitored, especially after the recent reductions in mortgage rates, investors were told.