GCIBerenberg hikes target price on Grafton
Analysts at Berenberg hiked their target price on building materials company from 1,100.0p to 1,200.0p on Friday, citing an "attractive opportunity".
Berenberg said while trading conditions remain "challenging" for Grafton, illustrated by expectation for a 15% decline in profit this year, it maintained its positive view for three reasons.
"Firstly, we expect more favourable market conditions from 2025 - in terms of both volumes and pricing - driving a recovery in profit. Secondly, we note an attractive capital returns story, with Grafton returning about 8% of its market cap per annum, on an ongoing basis, through a mix of buybacks and dividends. Finally, we see upside risk from the group deploying its surplus capital into value-enhancing acquisitions," said Berenberg.
The German bank, which reiterated its 'buy' rating on the stock, also noted that Grafton trades on 18x and 15x its 2024 and 2025 earnings per share forecasts.
Reporting by Iain Gilbert at Sharecast.com
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