Broker snap: Inflation worries overdone at Travis Perkins

8th Mar 2011 11:56

RBS believes that investor concerns about cost inflation at Travis Perkins (TP) are overdone and maintains its positive stance on the stock.The builders' merchant and owner of the Wickes chain of DIY stores issued a 2011 overhead inflation guidance of £60m. "In our view, TP's guidance reflects inflation realities and continuing investment," said RBS.RBS leaves its 2011 and 2012 forecasts essentially unchanged, as it expects the group to continue to outperform the wider UK merchanting industry. "Whilst we assume this rate of outperformance eases and we continue to forecast a decline in retail profitability in 2011, TP still, in our view, offers fundamental attractions short and longer term."The target price is raised to 1,300p, from 1,295p, and a 'buy' rating is kept.