Liberum raises target price on Tyman

Analysts at Liberum raised their target price on door and window components distributor Tyman from 320.0p to 400.0p on Friday and retained their 'buy' rating on the stock.

Liberum upgraded its estimates for Tyman's 2020 earnings for a third time since July 2020 following "a strong finish" to to the year and management guidance for second-half revenues broadly in line with 2019, marking a strong recovery after a Covid-19 pandemic-ravaged first half.

"The 2020 upgrade is bigger than it looks as Tyman's management has pledged to return the CJRS funds received in the UK (£2.3m), so the underlying profit before tax upgrade is £6.3m rather than £4.0m," Liberum also pointed out.

The analysts stated that Tyman's 12-month forward price-to-earnings ratio of around 13x looks "undemanding" given US market leadership, exposure to the strong US housing market, improving operational efficiency and falling leverage.

However, Liberum also retained "an element of caution" at this early stage of the year, with its expectation for earnings per share in 2021 being "modestly lower" than what it expects for 2020 as the tax rate was expected to rise from 21.7% to 24.5%.