Travis Perkins (LSE:TPK) shareholders may face more downside risk, according to a note from analysts at Jefferies who have now cut their price target, and
Repeating an ‘Underperform’ rating, the broker warns that market expectations for the builders’ merchant may still be too high. Jefferies price target meanwhile reduces to 443p from 464p, implying 19% downside from the current price of 545.5p.
“Although management seemed comfortable with JEFe's below-consensus forecasts at the time of the 1Q26 update, with JEFe cut yet again, we see market expectations as having yet to find a floor,” Jefferies said.
The broker now expects FY26 EBITA of around £123 million, down from its prior estimate of roughly £127 million. It said its forecasts remain around 9% to 14% below consensus per annum, leaving scope for further market downgrades. The pressure point remains Travis Perkins’ core Merchanting business. Jefferies said its sales forecasts for the division are largely unchanged, but weaker volume assumptions and negative operating leverage have led it to squeeze margin estimates further.
“Volume/margin trade-off in core Merchanting division remains the key drag on forecasts,” the broker said.
Jefferies acknowledged that a UK construction recovery or consolidation in the UK distribution market could provide meaningful upside over time, but said both appear uncertain for now.
That leaves Toolstation Benelux as the clearest near-term catalyst. Management has committed to providing an update on the loss-making business by the first-half results, and Jefferies estimates that a sale or exit would provide a technical uplift of around £11 million to FY26 EBITA, equivalent to about 8% of consensus.
Even so, the broker argued this appears “already largely expected”. In its risk-reward analysis, Jefferies put its base-case valuation at 443p, with an upside scenario of 735p and a downside scenario of 256p.