DAVY VIEW

We are cutting Travis Perkins (TPK) forecasts but increasing our recommendation on the stock to ‘Neutral’. The lowering of estimates (a cut of 46% and 19% to trading profit forecasts for this year and next year respectively) is an attempt to model the impact of COVID-19. Our more constructive stance is based on a relatively undemanding valuation (2021 P/E multiple of 12.5x as the stock is down almost 30% year-to-date) and greater confidence in the direction and delivery of the group’s strategy.