FTSE 100 movers: Wolseley at 'watershed'

28th Sep 2009 13:06

Plumbing supplies merchant Wolseley is the best performer on FTSE 100 today as brokers suggested that today's figures could be a watershed.Though the company announced a staggering post-tax loss of £1.17bn, broker Charles Stanley takes 'some solace from some of the more positive trends such as that of improving cash flow in spite of the lower profitability.' 'The Wolseley share price has participated in the cyclical led stock market rally with about a 40% rise over the last six months and this has left the shares looking fully valued,' reckons investment analyst Tony Shepard. 'For example, the 2010 and 2011 P/E [price/earning ratio] is 16x and 14x respectively. These multiples appear higher than those of the peer group such as Travis Perkins.' Despite these misgivings, the broker has kept its recommendation at 'hold', and feels 'that there may be a strong profit recovery beyond 2011.' Concerns about the threat Tesco Direct poses to the Argos brand has prompted Credit Suisse to downgrade Argos owner Home Retail. The Swiss bank now expects the shares to underperform, having previously been neutral on the stock. Analysts at Credit Suisse (CS) have been poring over the Argos catalogue and reckon that prices in the current season are up by around 10% year on year, though the effects of these increases are typically offset by tactical price cuts. CS added that Tesco Direct was cheaper than Argos 'across a far greater number of products'. The bank has a 235p price target for the stock. FTSE 100 - RisersWolseley (WOS) 1,457.00p +11.31%SEGRO (SGRO) 377.20p +4.49%Legal & General Group (LGEN) 78.35p +4.40%Hammerson (HMSO) 407.90p +3.53%3i Group (III) 289.40p +3.39%AstraZeneca (AZN) 2,840.00p +3.22%TUI Travel (TT.) 267.00p +3.05%Old Mutual (OML) 100.00p +2.93%FTSE 100 - FallersHome Retail Group (HOME) 277.00p -3.15%Royal Bank of Scotland Group (RBS) 51.35p -1.25%Tullow Oil (TLW) 1,162.00p -1.11%BT Group (BT.A) 131.00p -0.91%Rentokil Initial (RTO) 114.20p -0.78%Prudential (PRU) 578.00p -0.60%Compass Group (CPG) 357.80p -0.56%Cairn Energy (CNE) 2,698.00p -0.44%