Travis Perkins (LSE:TPK) saw its shares rise in London trading after J.P. Morgan included the company on its Positive Catalyst Watch ahead of third-quarter results, which are scheduled for October 16.
Shares jumped over 3% following the announcement.
J.P. Morgan analyst Zaim Beekawa highlighted that Q3 is likely to continue reflecting the benefits of measures Travis Perkins has taken to recover lost market share in recent years. Beekawa also pointed to a favorable comparison base, noting that last year’s Oracle Financials rollout caused disruptions and dampened volumes.
“Overall, based on our recent conversation with the company, the actions taken by Travis Perkins and an easier comparative basis, we would expect the company to see growth in the quarter and we expect positive like-for-like (LFL) revenue trends driven solely by volumes,” Beekawa wrote.
The analyst expects 1.5% LFL growth in Merchanting and 2.2% in Toolstation. He added that the company entered the second half of the year with “momentum and optimism” after reporting slightly positive trading trends in July.
Investor interest has also been supported by the appointment of new CEO Gavin Slark, whose strategic vision is seen as a key milestone for the company.
J.P. Morgan maintains an Overweight rating on Travis Perkins with a 670p price target. The bank believes the company remains in the “very early innings of the recovery,” citing workforce re-engagement, stronger capital discipline, and targeted cost management. It also noted that a broader market recovery should provide additional earnings leverage when it occurs.
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