A recent update from Travis Perkins (LSE:TPK), the merchant and home improvement retailer, highlighted its continued resilience in the third quarter, whilst its subsidiary Toolstation saw growth in the period, say brokers.
Analysts at Liberum expect the housing market to soften in light of increased mortgage rates and reduced confidence but highlight Travis Perkins as historically responding well to falling demand, saying it can “protect an already strong balance sheet”.
Liberum pointed to Travis Perkins’ good track record of cutting overheads in times of falling demand and noted that it can reduce inventories and rein in capital expenditure.
Liberum says Travis Perkins is a buy, forecasting a 25% total shareholder return if rate expectations and inflation peak, despite estimating a 7.5% fall in demand for merchanting in 2023.