Moody's assigned a first-time issuer rating to Switzerland-based building materials distributor Ferguson PLC of Baa2 with a stable outlook, citing the company's solid business profile.

The rating agency noted the company's leading position in the distribution of plumbing and heating materials, track record of market share gains, extensive distribution network and multichannel presence, and overall conservative and well-articulated financial policy.

Ferguson's challenges include the inherent cyclicality of its end markets, the risk of heightened industry competition, the company's progressive dividend policy, and lower margins compared to other rated distributors, according to Moody's.

The stable outlook reflects Moody's view that sound business execution and favorable U.S. end markets will help the company improve its operating performance in the next 12 to 18 months.