After a strong run in the share price, passing their target price on the way, analysts at Panmure Gordon believe it is time to lock in some profits on Wolseley.

Hence, they cut their recommendation from Buy to Hold, while maintaining their 2500p target price.

Of interest, they indicate that,"having healthy exposure to US construction markets has been a catalyst for share price out-performance. We would flag Ashtead and Keller while noting that Home Depot in the US has also done very well. Wolseley's share price started the year at 2000p and recently hit 2800p equivalent to 26% relative (to all share index) outperformance year to date."

Valuations compared


Their forecasts for a fiscal year 2012 earnings per shares (EPS) of 162p, versus a consensus estimate of 160p, and a fiscal year 2013 EPS of 184p (Consensus: 183p) imply a calendar 2012E price-to-earnings multiple of 16x falling to 14x. That compares with its near UK peers on circa 11x, although Home Depot appears to be on 18x.

Nevertheless, the broker admits that the company´s shares offer a sound long-term investment case. Panmure thus adds that: "We have been impressed with the action taken by management in recent years, with many of its problem businesses sorted out. The 63%/37% North America/Europe split is still an attractive "mix," until signs of a stronger European recovery emerge."

Despite which...recommendation trimmed

Lastly, these analysts write that: "The next news update from the group will be the fiscal year results release on October 2. July traditionally is a key trading month for the group. With the share price having sailed through our target price we believe it is right to now lock in some profits so we cut our recommendation to Hold (from Buy)."



AB

Related share prices
Ashtead Group (AHT) share price
Wolseley (WOS) share price
Keller Group (KLR) share price