Jefferies downgraded Travis Perkins on Tuesday to ‘hold’ from ‘buy’ and slashed the price target to 1,416p from 2,189p.
The bank said a significant portfolio simplification over the last 18 months or so, management setting out a longer-term vision at the September 2021 capital markets day and scope for ongoing extra cash returns gives it confidence that Travis Perkins is now better placed to be a core longer-term holding in investor portfolios.
Jefferies said it sees Travis Perkins as a much simpler group now, which is already building a reputation for steady delivery in line with or ahead of expectations, thus marking a clear break from the period of operational hiccups pre-2019.
In addition, the balance sheet appears in much better shape and Jefferies forecasts net debt/EBITDA to remain easily below the target of 1.5-2x , suggesting extra cash returns may become an ongoing feature.
“However, with fewer catalysts compared to when we upgraded in September 2020 and elevated macro nerves, we downgrade to hold,” it said.
At 1105 GMT, the shares were down 1.6% at 1,271p.
