DAVY VIEW

We estimate the impact of COVID-19 will leave Grafton’s earnings by the end of next year over 25% lower than what was expected prior to the pandemic. Current circumstances are unprecedented with considerable lingering uncertainty, but Grafton is well placed and its cash generation should stand out even when earnings are challenged. The stock has been volatile but at a little over 14x our updated 2021 EPS forecast looks reasonably valued for now. Accordingly, we are changing our recommendation to ‘Neutral’.