Travis Perkins shares tipped after positive update

Following its reasonably positive pre-close trading update just before Christmas, shares in builders merchant group Travis Perkins have been tipped for growth by City analysts.

With trading stabilised across the group’s merchant stores and the Wickes retail business showing a , steady recovery, the group continues to achieve cost savings and reduce its debt by cash generation. Citigroup have therefore given the merchant a medium risk buy rating.

To the end of November 2009 sales fell by 8.5%, compared with the year before, a much more positive figure than the 11% decline in the nine months to September 30.

“Recent trading trends have confirmed our view that the merchanting market has stabilised, and the retail market has continued to enjoy a steady revival in activity,” the company said.

Travis Perkins owns the eponymous builders’ merchant chain, as well as DIY group Wickes, Keyline Builders Merchants and a clutch of other chains. In total it has 1,200 stores in the UK.

Sales at the merchanting division fell by 14.3% over the last 11 months on a like-for-like per-day basis, although that improved to a fall of 5.5% in the last two months.

Sales at Wickes, meanwhile, were up by 2.3% on a like-for-like basis. For the nine weeks to November 28 it was up by 10.2%.