Analysts at Berenberg almost halved their price target for specialist retailer Victorian Plumbing from 130.0p to 70.0p on Wednesday as they lowered the group from ‘buy’ to ‘hold’, citing inflationary headwinds.
Berenberg said Victorian Plumbing’s annual general meeting trading update on 24 February highlighted the fact that higher-than-expected inflation was impacting margins.
The German bank highlighted that while the group had outperformed the market, it expects retail DIY demand normalisation to continue to drag on top-line performance.
“Although a challenging market environment provides scope to capitalise on sub-scale peers – which is positive in the long term – with sales and margin headwinds likely to continue, we believe there are only a limited number of positive catalysts to drive improved investor sentiment,” said the analysts.
Berenberg stated that Victorian Plumbing trades on a 0.7x full-year 2022 enterprise value/sales ratio, an 11.3x enterprise value/underlying earnings multiple and a 22.4x price-to-earnings ratio.
