Travis Perkins Share Price: The ‘Risk/Reward is Compelling’

Stifel raised its rating for Travis Perkins (LON: TPK) from Hold to Buy in a recent note to clients, citing a favourable risk/reward profile and upside potential from a cyclical recovery. 

The broker set a new price target of 750p for the builders' merchant and home improvement retailer.

Analysts at the firm argued that the shares are trading at historically low levels, presenting an attractive entry point for investors. 

“We may be early, but we are convinced that Chair Drabble can keep improvement actions going and will bring in a high-calibre CEO,” the note said.

Stifel sees room for earnings recovery, pointing to the potential upside if industry volumes rebound. 

“Earnings should at least double if the 15% volumes lost since 2021 are recovered,” the firm added.

While acknowledging short-term risks, Stifel views the company’s conservative 2025 guidance as offering a solid base. The note also flagged interest in sector consolidation, noting that “consolidator QXO appears to be just getting started.” 

The upgrade comes as Travis Perkins continues to navigate a tough construction environment marked by cost pressures and muted demand. 

The company reported last week that its full-year 2024 revenue fell 4.7%, driven by price deflation, continued decline in market volumes and underperformance in the merchanting segment.

Travis Perkins' stock price fell over 10% following the report, but has since found buyers willing to step in, with a gain of more than 7.5% off the 52 week lows.