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Peel Hunt adjusts ratings in UK building materials and merchanting sector after cutting estimates, targets

Peel Hunt said it upgraded all ratings for Ferguson PLC, Keller Group PLC, and Volution Group PLC to ‘add’ from ‘hold’

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It lowered stances for Forterra, Ibstock, and Marshalls PLC to ‘add’ from ‘buy’

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.

Quick facts: Ferguson PLC

Price: 8540 GBX

LSE:FERG
Market: LSE
Market Cap: £19.22 billion
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