Irish broker Davy has downgraded its recommendation for Wolseley from 'outperform' to 'neutral' following the plumbers' merchant full year results.

While acknowledging that the stock has been an outstanding recovery story over the past three years, culminating in the special dividend of around 120p a share, it believes it is now fairly priced on a PE of over 15.

Davy states: "At this level, we believe the stock is fully valued, especially with the risk to forecasts, although its exposure to the recovering US residential housing market may well prove attractive to investors."

Jefferies Hoare Govett, meanwhile, sticks with its 'hold' rating, noting that the full year figures beat market consensus but adding that the European outlook is a concern.

"Wolseley continues to be a tale of two businesses, with recovery in North America being somewhat offset by deteriorating trading in Mainland Europe. With the outlook for Europe (especially the Nordics) continuing to be difficult we expect limited consensus upgrades on the back of today's numbers," the broker said.

As for the widely expected special dividend, Jefferies says the proposed shareholder return of £350m is within the expected range of £250m-£500m.


CM

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