Credit Suisse has reset its recommendation for Ferguson PLC (LON:FERG), moving to ‘neutral’, as it described the plumbing products firm as a “high-quality, growth stock in the long term”.
Analysts at the Swiss bank reckon there’s scope for the company to re-rate relevant to its peers, but, in the immediate term its view is less certain.
READ: Ferguson quickly U-turns, suspends interim dividend
“In the short term, we lack sufficient earnings visibility to be more positive, given that we think a meaningful recession through 2021 would lead to a c.25% further reduction to our new estimates,” analyst Emily Biddulph said in a note.
“Although the group is committed to an additional US listing, we believe market volatility puts the timetable at risk, limiting scope for near-term re-rating.”
The analyst described the suspension of the interim dividend as “a very conservative step” and highlighted a forecast for a US$1.18bn final dividend for 2020.