Berenberg believes Wolseley's valuation discount to US peers may narrow

All of the above led the German broker to lift its earnings per share estimates for Wolseley in 2017 and 2018 by 8% and 2%, respectively.

A combination of tighter cost control and product price inflation meant double-digit drop-through was achievable in fiscal year 2018, it said.

Its forecast was for -10% drop through in the US for fiscal year 2018.

The current valuation gap between Wolseley's stock and that of its peers should also narrow as the company's exposure to the US increased, Berenberg said.

At a 2018 price-to earnings multiple of 14.3, its shares were sitting at roughly a 25% discount versus its American peers, despite having a similar growth profile.

Concerns regarding Amazon.com were also being overdone, according to the broker.

Amazon Business was a B2B marketplace which competed mostly in price, as opposed to Ferguson which did so on service.

Proceeds from the sale of the Nordics business may be used to repurchase shares and for M&A in the States, Berenberg said.

Margins were also expected to improve in the UK, Canada and Central Europe.

Berenberg reiterated its 'buy' recommendation for the shares and raised its target price from 5,700p to 5,800p.