Berenberg cuts price target on Marshalls

Marshalls shares tanked on Tuesday after the landscaping and building materials group cut annual guidance on the back of a 14% fall in like-for-like sales, due to lower new house building and continued weakness in private housing maintenance activity.

Berenberg said: "The update highlighted the continuation of tough trading conditions in the UK new build and private repairs, maintenance and improvements (RMI) markets, ultimately resulting in the company guiding below prevailing market expectations.

"As such, we update our numbers to reflect the further deterioration, resulting in a decline in 2023/2024/2025 earnings per share of -14%/-12%/- 10% respectively."

Berenberg said it thinks Marshalls has some high-quality assets in the business, but is dependent on a recovery in UK construction market volumes that, at present, is just not there.

"As we have flagged in recent notes, the macro environment is undoubtedly tough in the near term and we wait to see how demand levels evolve in the coming months," it said.

Berenberg rates the shares at ‘hold’.