Canaccord raises target price on Travis Perkins

Canaccord now expects Travis Perkins to deliver "a modestly higher" 2020 second-half underlying profit outcome year-on-year, before paying back government monies received during the Covid-19 pandemic.

The Canadian bank, which maintained its 'hold' rating on the stock, said recent sector news-flow suggested that trading continued to be good right to the end of 2020 and that momentum into 2021 also looked "good".

"We expect the group to deliver a good set of 2020 full-year results," said Canaccord.

"Looking into the second half of this year, the group may benefit from a successful rollout of the vaccine allowing life to return to closer to normality, a successful de-merger of Wickes with also the possible sale of P&H allowing it to focus on delivering growth and good returns from its core business."

In such a scenario, Canaccord expects the trade-focussed, reshaped group to see general merchanting outperform the wider market and its Toolstation subsidiary to offer "very strong growth prospects" as a result of store openings, product range extensions and maturity of existing stores.