Investec upgrades Grafton to 'buy', says premium rating justified

9th May 2014 12:14

Investec has upgraded Grafton Group from 'add' to 'buy' after a 'strong start to the year' by the builders merchant and DIY company."We continue to believe Grafton's premium rating is justified by its superior growth profile relative to peers," said Analyst Tom Holmes.Grafton, which has operations in the UK, Ireland and Belgium, said that demand in its markets had improved and revenues in the first four months of 2014 rose 13.5% to £654m. Growth was helped by weak comparatives as results last year were dampened by poor weather conditions."We are particularly encouraged by an improving UK residential repair, maintenance and improvement market and early signs of a pick-up in Irish residential construction activity," Holmes said."Having upgraded our 2014 operating profit forecast by 2.4% to reflect the better-than-expected start to the year and an improving outlook, we raise our [...] target price to 710p (from 690p) and upgrade to 'buy'."The stock was 2% higher at 624p by 12:14.BC