Peel Hunt downgrades Polypipe after full-year results

Analyst at Peel Hunt downgraded their recommendation on stock in Polypipe following the recent sharp run-up in the share price.

On Tuesday, the manufacturer of pipe of and water management systems for the residential, commercial and public sectors posted a strong 4.2% jump in full-year like-for-like sales, but margins took a hit, in part as it ran into capacity constraints in the fourth quarter, as sales picked up sharply after a flat first half.

Although the company had already made extra investments in order to alleviate those, and despite price increases for customers and the full-year contribution of the Manthorpe and Permavoid businesses which it acquired in the second half of 2018, the analysts did not expect to make any major changes to their estimates for the company's 2019 profits before tax and earnings per share.

Barring further acquistions, the broker also expected net debt to reduce to about 1.4 times operating profits.

Even so, it kept its target price at 455p.

But above all, the shares had had a "very strong run" year-to-date, gaining 32%, Peel Hunt pointed out as it downgraded the stock from 'buy' to 'add'.