Travis Perkins (LSE:TPK) near-term set-up looks unconvincing even if the builders merchant has stronger recovery potential as UK markets improve, that's according to analysts at Stifel.
The broker, in a note, kept a 'hold' rating for TP and cut its forecasts.
With a price target of 700p, compared to a current price of 628.5p, Stifel analyst claimed they would prefer to wait for "a better entry point", noting that at the moment the valuation appears stretched.
"The fundamentals of recovery are in place for 2026, but lack of momentum at the start of the year may make recovery H2 weighted, so we cut our like-for-like growth assumption for 2026E from 3.5% to 2.25%," the broker said, adding: "Travis Perkins has significant recovery potential as markets pick up, and lost market share is recouped, and the new CEO, Gavin Slark looks eminently qualified to deliver this."
Stifel cut EPS estimates by 2% for 2025E and 9% for 2026E. It said it has not yet seen enough data to take a firm view on how 2026 will play out for UK building materials suppliers. While it still expects improvement in the UK RMI market, it noted a lack of momentum at the start of the year.
Moreover, it also highlighted that margins are currently low, making earnings sensitive to revenue assumptions. It pointed to subdued activity, with volumes 15% to 20% below 2019, and referenced the CPA cutting its 2026E growth forecast to 1.7% from 2.8%.