Analyst Arnaud Lehmann from Bank of America Securities reiterated a Buy rating on Ferguson PLC (FERG – Research Report) and decreased the price target to p15,800.00 from p18,000.00.
Arnaud Lehmann has given his Buy rating due to a combination of factors that highlight Ferguson PLC’s potential for long-term growth despite short-term margin challenges. The company’s recent Q2 results showed a strong volume performance, particularly in the US, which was slightly above market expectations. However, this was offset by lower-than-expected margins due to ongoing deflation and increased SG&A expenses.
Lehmann sees the current margin softness as a strategic entry point into a company with a robust business model, characterized by market outperformance and strong free cash flow generation. Ferguson’s valuation is particularly attractive, trading at a significant discount compared to its US peers. Despite revising the price objective downwards to account for lower earnings estimates and currency impacts, the long-term fundamentals and potential for shareholder returns support the Buy recommendation.
According to TipRanks, Lehmann is a 4-star analyst with an average return of 9.8% and a 64.29% success rate.
In another report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $204.00 price target.