UBS has slashed its price target on Travis Perkins (LSE:TPK) from 750p to 530p, following a third profit warning in under a year and what it sees as a more difficult road to recovery.
The building materials group, whose shares are down 31% so far in 2025, now faces questions about the shape of its rebound, with earnings expected to fall 71% in 2025 compared to 2021.
Following disappointing full-year results, UBS remains neutral on the stock but warns that execution risks are rising.
With no permanent CEO in place and another downgrade to earnings guidance, investors are left wondering whether this is a case of poor strategic calls or deeper structural problems in the UK building supplies sector.
UBS has sharply cut its 2025 earnings forecasts, lowering expected EBITA by 19% to £138 million (just under management’s implied guidance) and trimming earnings per share by 29% to 30p.
This reflects continued weakness in the group’s core Merchanting division, only partly offset by modest gains in Toolstation’s UK and Benelux operations.
Looking ahead, the broker sees a more gradual earnings recovery than previously assumed, cutting forecasts by a further 16–21% in subsequent years.
Valuation-wise, UBS now sees a fair value of 530p, based on a discounted cash flow model with lower long-term returns and a higher cost of capital.
The downgrade reflects not only the reduced earnings profile but also uncertainty around leadership, strategic clarity, and whether the market share being lost to aggressive private rivals can be clawed back.
There are some bright spots. New chair Geoff Drabble, who joined in October, brings credibility and is actively involved in stabilising the business while the CEO search continues.
The exit from Toolstation France also helps narrow the group’s focus. And if the UK housing market begins to recover, earnings could have already hit a low.
Still, UBS cautions that the competitive pressure in UK building distribution remains high and that an over-focus on cutting costs and conserving cash could limit the group’s ability to bounce back when demand does return.
For now, investors will be watching closely for signs of operational stability, strategic clarity, and any uplift in the wider UK construction market.
The stock was flat at 507p.