Howden put on 'hold', target price lifted by Canaccord after good UK performance

Analysts at Canaccord Genuity lifted their target price on Howden Joinery to 525p from 515p but downgraded the group to 'hold' from 'buy' as it sought clarity on where group growth would come from.

With Howden continuing to deliver "a good performance" in a difficult UK market while flexing its pricing and volume focus, new chief executive CEO Andrew Livingston alluded to further opportunities to build on the firm's core business model by expanding its product range, upgrading its IT and digital offering.

Canaccord expects some gross margin improvement in the second half of the year and stated that it believes Howden remained "well-positioned" to continue to outperform the wider UK market "given its strengths".

However, the Canadian broker was still reviewing Howden's European arm.

The analysts were not expecting an imminent decision as to whether or not the group would make any substantial investment to grow its small French business, with Brexit further clouding the process.

"After the strong share price run over the last twelve months as well as the current valuation, we move to a 'hold' (from 'buy'). We await more details on where a potential next leg of growth might come from once the CEO has fully reviewed Europe and settled in more, allowing him to fully consider the nuances of the business model," said Canaccord.