Polypipe Group PLC (LON:PLP) said trading has topped expectations so underlying operating profit for the year is expected to be at least £35mln, compared to the current consensus of £30-35mln.
In the four months to October 31, revenue was only 1% lower than 2019 at £156mln and the firm said there was continued improvement during the period.
READ: Polypipe says trading almost back to normal but not ready to pay dividend yet
Residential systems dipped 4%, compared to a 28% decline in the first half, driven by the UK housing market recovering faster and stronger than expected as well as a resilient repair, maintenance and improvement market.
Commercial & infrastructure revenue shed 2% as the contract markets continuing to recover well.
The maker of recyclable plastic piping said operating have also improved compared to the first six months as volumes recovered despite the costs of COVID-19.
As of October 31, net debt was £32mln, while full-year capital expenditure guidance remains £20-25mln.
Peel Hunt raised the target price to 460p from 420p and upgraded its estimates for profit before tax by 20% to £29mln in the current year and by 12% to £58mln in 2021.
However, the broker retained its ‘hold’ rating because “the valuation is simply too rich for us, and we see better value elsewhere in the sector”.
Shares rose 4% to 539p on Tuesday at the opening bell.