Canaccord Genuity nudges up target price on Marshalls

Analysts at Canaccord Genuity slightly raised their target price on landscaping products manufacturer Marshalls from 605.0p to 610.0p on Friday, stating a recent recovery in sales was just what the doctor ordered.

While Canaccord said it was "early days" and acknowledged that macro risks "clearly" remained, the recovery in sales since the end of May was "promising" and the group also appeared to be displaying some "decent momentum and traction".

The Canadian broker added that Marshalls should be in "a good position" with its exposure to infrastructure projects and outside domestic jobs, noting demand appeared to be strong.

Canaccord highlighted that Marshalls had done "a very good job" of reducing net debt, helped by trends in recent trading and also noted that the group's restructuring should improve its operational efficiency without materially reducing its capacity - assuming the market continues to recover strongly.

"Clearly first-half profits will be severely impacted by lockdown but the second half should show a good rebound, and we expect strong profit recovery in 2021," said Canaccord.

The analysts said the key issue from here would be the sustainability of the recovery in sales with the company's balance sheet and operations looking sound.

"While valuation continues to look quite full, the group sits at a deserved (in our view) premium to the wider sector and the update was much better than feared with a good recovery and net debt reduction being seen," said Canaccord, which reiterated its 'hold' rating on the firm.