DAVY VIEW

An increasing possibility that Grafton will undertake a platform acquisition (£100-500m) this year merits an analysis of the possible effect of such a transaction. Applying Grafton’s investment criteria – we take a return on capital employed target of 13% by year three – suggests potential 2026 earnings of around 60% above the current forecast for this year. This potential, alongside the benefits from a likely cyclical upturn, cements the Grafton investment case. Our updated price target of 1200p suggests good upside from current levels.