Canaccord raises Ferguson target price on US outlook

The FTSE 100 company has reported a 9.3% decline in US revenue for April – a swing from 8.2% growth in February and March. The drop in the US, which makes up about 80% of Ferguson's business, was smaller than in Canada and the UK.

The US result was not as bad as expected and with US construction markets reopening business is likely to be better than forecast in the quarter to the end of July, Canaccord said.

Analyst Nigel Parson kept his 'hold' rating on Ferguson shares and upped his price target to £60 from £51.40. He also raised his estimate for annual profit to $1.387bn (£1.1bn) from $1.209bn.

"There remain macro risks around the US construction market, especially the potential for a second wave risk as the economy starts to open up," Parson wrote in a note to clients. "However, with the economy beginning to open back up and in view of the resilient performance seen in April, we increase our trading profit estimate for the group."