Credit Suisse reiterates 'outperform' rating on Howden Joinery

Credit Suisse stated it sees the recent de-rating in Howden as providing "a value opportunity" and that is of the belief that 2022 earnings expectations were "well underpinned by pent-up demand", and some resilience in recent market share gains.

The Swiss bank also highlighted that its new analysis of market share by price bracket suggested "material scope" for Howden to continue compounding the market, driving sustained long-term growth in the process.

"We continue to forecast £380.0m 2021 PBT, 4% ahead of consensus. We believe our estimate is conservatively based, factoring in scope for Omicron disruption and high opex investment," said CS.

"Had historic kitchen installs/housing transactions held up in '21 we believe they would’ve been c.25% higher. However, installs were impacted by supply chain issues, COVID disruption and tradesman availability. We expect pend up demand to underwrite market volumes in '22. While we are conscious that HWDN took material share in '20/'21 we believe our -6% volume est for '22 allows for a realistic level of normalisation."

CS, which has an 'outperform' rating and 1,030.0p target price on the stock, did caution that risks included a material slowing in home improvement and a greater reversal of 2022's share gains than it anticipates.