DAVY VIEW

We have formally updated our Grafton estimates following the group’s trading update. As per company guidance, our operating profit forecast for this year is tweaked lower by 1% to £266m. As previously flagged, we take a more cautious stance on next year, specifically margins. This is reflected in a revised operating profit forecast of £202m, 12% down on the previous estimate. Despite the cyclical downturn hit, we see the intrinsic value of Grafton remaining intact. This is reflected in our price target of 1300p.