Date: Monday 18 Jun 2012
Jefferies has cut its target price for building products distributor SIG from 146p to 143p, but has maintained its 'buy' rating on the stock, saying that the new target still represents 47 per cent upside to the current share price.
Like-for-like sales in the first four months of the year increased by around 1% despite tough prior-year comparisons and the impact of severe weather in February and April.
Meanwhile, unfavourable exchange rate movements (the euro depreciated 3.4% during the period) meant that group sales in sterling fell by slightly less than 1%.
"A weakening euro and weather impacted trading in the first four months of the year lead us to reduce our forecasts for 2012 underlying operating profit by 5% [from £101m to £97m]. Exchange rate movements account for around one third of this decline," Jefferies said in a research note.
The broker said that risks to SIG's valuation include a slowdown in underlying European trading and continued euro depreciation against the pound.
Shares were down 3.49% at 94.15p in mid-morning trade on Monday.
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