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Ferguson's North American momentum could lead to upgrades, says Canaccord
With Ferguson shares now touching an all-time high, analysts at Canaccord Genuity expect the group to report a "good" and "supportive" third-quarter update on 19 June, with attractive profit growth driven by strong US organic growth and margin improvement.
Canaccord forecast Ferguson's profit growth to slow from its strong first-half performance as comparatives become more difficult, but continued to predict a good result for the firm in the US. If Ferguson is able to main momentum in America through to July, the broker believed it could bring about a modest upside to the group's 2018 consensus estimates.
The broker, which reiterated its 'hold' rating on the plumbing and heating products distributor, expects Ferguson's US third-quarter organic growth to come in around 8%, including a 2% bump from price inflation, as well as a roughly 1.7% benefit from acquisitions.
The underlying market in the UK was expected to have remained "challenging", however, Ferguson's Canadian operations were forecast to have continued to deliver "healthy high single-digit percentage growth".
"Overall, the shares look well supported by good underlying trends in Ferguson's key US market, market share gains and a strong balance sheet," Canaccord's analysts concluded, edging their price target up to 6,080p from 5,985p mainly to take account of the strength of the US dollar on valuation since their last note.