10th Mar 2022 18:08
(Alliance News) - Berenberg maintained its positive stance on Ferguson PLC after the plumbing and heating products supplier prepares to exit the FTSE 100.
Shareholders at general meeting on Thursday approved plan to move the company's primary listing to New York Stock Exchange, keeping only a standard listing on the London Stock Exchange.
Of the votes cast, 95.5% are in favour. Ferguson has had an additional US listing since March of last year.
"Ferguson's operations are 100% North American, and the board believes the US is the natural long-term primary listing location for the company," said Chair Geoff Drabble.
Ferguson sold UK business Wolseley to US private equity firm Clayton, Dubilier & Rice LLC in February last year. As a result of giving up its premium listing in London, which will take effect on May 12, Ferguson will drop out of the FTSE 100 index, FTSE Russell had confirmed early last month.
Berenberg said the geographic logic of changing the primary listing was already compelling, but company now has the extra benefit from the higher trading multiples that US equity markets apply to sector peers.
Analysts at the German bank said: "We believe Ferguson has an extremely compelling medium-term growth runway given its ability to achieve above-market growth through market share gains and further consolidation of its still highly fragmented competitor base.
"As such, we believe Ferguson can achieve medium-term sales growth of 7% pa, which when combined with modest annual margin expansion (of 20 basis points per annum) and the buyback (which will reduce the share count by 3% pa), should result in 13% EPS growth pa."
By Arvind Bhunjun; [email protected]
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