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Berenberg sets a floor after Victoria pullback
Analysts at Berenberg said a share pullback at Victoria was "overdone" and that not all repair, maintenance, and improvement firms are made equal.
Berenberg, which reiterated its 'buy' rating and 950p target price on Victoria's shares, which since the end of January 2018 have lost roughly 20% despite seeing no news-flow from the company.
The pullback Berenberg attributed to profit-taking, the range of weak data points emanating from the UK RMI market, and broader concerns about Britain's consumer environment.
But, with the shares back trading a 13.7 times March 2019 earnings and 9.4x EBITDA, "we think the pullback is overdone," Berenberg's analysts said.
While the recent results from DIY retailer Kingfisher pointed to "softer Q4 sales reflecting weaker demand for big-ticket items", Berenberg pointed out that the difference over at Victoria was that, as a flooring manufacturer, there are several factors that had been overlooked in the recent sell-off.
"The performance of companies in the UK RMI market has varied quite substantially in recent months - firms such as Volution, Marshalls and Howden have navigated the broader weakness well, while businesses such as Safestyle and Carpetright have not. We believe Victoria shares more characteristics with those companies that have done well than those that have not," it said.
Analysts also highlighted that Victoria had reportedly experienced "very good" levels of trading in the important December quarter, which continued into the New Year and that, following the two large acquisitions made by the firm in the ceramic tiles sector at the end of 2017, "we expect 45% of EBIT in FY March 2019 to come from continental Europe where market conditions appear more positive."