Howden Joinery Group's (LSE:HWDN) recent acquisition of DIY Kitchens has prompted RBC Capital Markets to raise its share price target ahead of the kitchen supplier's interim results.
The investment bank increased its target price to 960p from 900p after updating its forecasts to reflect the completed acquisition, but maintained its 'sector perform' rating.
RBC said the changes "solely reflect the addition of DIY Kitchens" and stressed it had made "no changes to our assumptions for the underlying business".
The acquisition is expected to lift adjusted earnings per share by 1.7% in 2026, 4.7% in 2027 and 5.1% in 2028, with DIY Kitchens contributing to revenue growth from the second half of this year.
RBC assumes the acquired business can deliver 15% like-for-like sales growth and has modelled it at a conservative 24% operating margin.
Ahead of first-half results on 23 July, the broker forecasts revenue of £1.04 billion and pre-tax profit of £120 million, with first-half earnings representing around a third of the full-year total.
Despite the higher debt taken on to fund the deal, RBC remains constructive on the group's longer-term prospects, arguing there is "still room to grow" through depot expansion, maturing sites and market share gains.
It expects Howden to sustain a 6% annual revenue growth rate over the next decade and highlighted its "strong track record through the cycle", noting the company has doubled its share of the UK residential repair, maintenance and improvement market since 2009.
