Barclays upgrades on Travis Perkins to 'overweight'

Barclays has raised its rating on builders merchant Travis Perkins from 'equal weight' to 'overweight', saying that the stock is an "undervalued UK recovery play".

Despite optimistic earnings forecasts, Travis Perkins shares have fallen by nearly 50% since the start of 2022, dropping from around the 1,500p mark to just 831p by Wednesday's close, heavily underperforming other names exposed to the UK residential sectors, according to Barclays.

"Travis has heavily underperformed other resi-exposed stocks since 2022. We estimate that under a full recovery, earnings could almost triple vs 2024E and under a bull case we could see 25%+ consensus upgrades by 2026," Barclays said.

"We see scope for meaningful improvement to medium cash conversion and in turn perception of quality of earnings."

The bank has hiked its target price for the shares from 760p to 1,050p, helping the stock 2.2% higher to 849.29p by 1035 BST.