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Risk Warning
04/10/2011
Shares in Wolseley shed 1.7 percent, albeit outperforming a 2.3 percent weaker FTSE 100 index, as the world's biggest building supplies company posts a 38 percent rise in full-year pretax profit, slightly ahead of expectations, but retains a cautious outlook.
Wolseley, operator of the Plumb Center and Ferguson chains in Britain and the United States, says the broader picture for building materials remains tough.
"While the headline numbers are better than expected the trading outlook and its markets remain uncertain... YTD (year-to-date) trends are similar to the +3 percent seen in Q4 but recent macro uncertainty will impact markets," Panmure Gordon says in a note.
The broker repeats its "sell" rating and 1,500 pence price target on Wolseley, saying its stock preference remains elsewhere for now.
CFD specialist Prime Markets believes that weakening economic forecasts, combined with the current parlous state of the markets could see Wolseley's dividend disappear again in the near future, as the firm will have to further tighten costs to meet the challenges thrown up by the coming downturn.
"As such, the shares are a sell into any strength, with lower resistance at 1,426 pence the likely destination in the coming 2-4 weeks," Richard Curr, head of dealing at Prime Markets, says.
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.