Peel Hunt has taken the red pencil to the UK building materials and merchanting sector, leading the City broker to reduce a number of target prices and make six recommendation changes, but not all downwards.
Peel Hunt said it upgraded all its ratings for Ferguson PLC (LON:FERG), Keller Group PLC (LON:KLR), and Volution Group PLC (LON:FAN) to ‘add’ from ‘hold’.
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Meanwhile, the City broker lowered its stances for Forterra PLC (LON:FORT), Ibstock PLC (LON:IBST), and Marshalls PLC (LON:MSLH) to ‘add’ from ‘buy’.
In a note to clients, Peel Hunt’s analysts said: “We are lowering forecasts by 5-8% across the sector to reflect a slower economic outlook, in part Brexit related and in part global growth related.”
They added: “While our aggregated sector profits are still forecast to grow by 8% in CY19, the majority of this growth is coming from recent acquisitions. We expect organic growth to be modest in both 2019 and 2020.”
The group said it reduced a number of target prices, having noted that most sector share prices have bounced sharply in the last month or so on hopes of a softer Brexit, but not all of them leading to its rating upgrades.