Market share gains made by Howden Joinery Group (LSE:HWDN) recently should stick over the long term according to broker Credit Suisse.
As a result, the broker has raised its profit before tax guidance by 20% to £420mln for the year.
It noted that management believes share gains were made via a “combination of its in-stock model, its pricing strategy and its efforts in gaining mid-range market share.”
Credit Suisse added easing supply chain issues may make the in-stock model less valuable to customers but believes there is limited near-term scope for competition to close the price gap.
It also said the management of the supplier of kitchens and joinery products believes the higher-end ranges are already contributing to a better price mix adding to the in created market presence.
The target price has been reduced slightly from 1030p to 1000p, “driven by the net effect of increasing our estimates and increasing our weighted average cost of capital to 8%," but the broker kept its 'outperform' rating.