Travis Perkins (LSE:TPK) shares rose almost 4% in the first hour of trading on Tuesday after the building materials supplier reported resilient first-quarter trading despite a tough market backdrop.
Group revenue fell 2.1% on a like-for-like basis for the three months to 31 March, as the Merchanting division saw volumes slip and pricing stabilise.
Merchanting revenue was down 3.2% like-for-like, although the company said it was focusing on improving customer service through strengthened branch and sales teams.
Toolstation, the group's retail arm, delivered a solid performance, with like-for-like revenue rising 3.7% as efforts to improve margins gained traction.
Travis Perkins said the market remained challenging but noted progress in key areas of its business.
Group total revenue was down 2.4% once network changes and trading days were factored in.
It seems the modest downturn had been largely expected. Peel Hunt believes there is scope for improvement after a period of underperformance for the building materials group.
"We continue to view Travis Perkins as an excellent turnaround candidate," the broker said.
"While the recent trading backdrop has been challenging, the group has contributed to its own difficulties through management missteps, resulting in the departure of some salespeople and a loss of market share.
"Encouragingly, the issues appear to be primarily due to over-centralisation and a lack of freedom at the branch level, which can be reversed over time and supplemented by a more considered application of the group’s data.
"Additionally, the business remains the scale player in the industry, with a national brand and some of the best locations."
Peel reiterated its 'buy' recommendation alongside its 750p price target.
The shares were up 19p at 547.5p.