On Monday, JPMorgan upgraded Travis Perkins (LON:TPK:LN) (OTC: TPRKY) stock, a UK-based building materials supplier, from 'Underweight' to 'Overweight.' The firm also raised its price target on the company's shares to GBP11.00 from GBP6.10, indicating a potential 20% upside.
The upgrade comes as JPMorgan anticipates a recovery in the UK market, which is expected to benefit Travis Perkins, especially with the Labour Party's focus on housing delivery. The company, with about 17% of its revenue tied to the housing sector, is seen as well-positioned to capitalize on this growth.
JPMorgan's analysis suggests that if volumes return to 2019 levels by 2027, with operating profit margins also recovering to 8%, Travis Perkins could see an upside of approximately 158% compared to FY24 adjusted operating profit expectations, and 45% above the consensus expectations for FY27.
The firm also notes that strategic measures and self-help initiatives are likely to contribute significantly to Travis Perkins' performance. These efforts are expected to be supported by a new leadership team, which JPMorgan believes can bring a fresh perspective to a business that has faced challenges in recent years.
Travis Perkins has not publicly responded to the upgraded rating and revised price target as of Monday. The positive outlook by JPMorgan reflects a broader confidence in the company's potential amid a recovering UK economy and housing sector.
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