Wolseley Upgraded at Morgan Stanley on Possible Unit Closure
10/8/2008
By Tim Barwell
Oct. 8 (Bloomberg) -- Wolseley Plc, the world's biggest distributor of plumbing and heating equipment, was upgraded to ``equal weight'' from ``underweight'' at Morgan Stanley on speculation the company may close parts of its underperforming Stock division, its U.S. building-materials business.
The review is ``likely to result in the permanent closure of large parts of the division, reducing losses and leading to better earnings for the group as a whole,'' London-based analyst Jessica Flounders wrote in a note dated today. This, ``combined with recent improved visibility on cash flow generation and a more lenient covenant calculation, has eased our concerns over Wolseley breaching its debt covenants.''
Reading, England-based Wolseley, which also had its price target raised to 410 pence from 298 pence, closed down 3.7 percent at 366.5 pence yesterday in London trading.
To contact the reporter on this story: Tim Barwell in London on tbarwell@bloomberg.net.