Analysts mixed on Brickworks after its swing to half-year loss
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The news: Analysts are mixed on the outlook for Brickworks after the construction materials company swung to a first-half loss of over $50 million, with long-term outlook holding most ratings steady.
The numbers: Jarden analysts kept their rating for Brickworks at 'neutral', but lowered their target price from $28.75 to $28.50. They noted "one step backwards to take two steps forward" as Brickworks announced the completion of its five-year plant rationalisation programme aimed at improving unit costs, freeing up surplus land and leading to a lower forward capital expenditure profile.
UBS analysts also lowered their target price from $33.00 to $32.50, while maintaining their 'buy' rating, anticipating a resurgence in building products demand from the 2025 calendar year.
Elsewhere, Macquarie analysts maintained their 'neutral' rating, and increased their target price for Brickworks from $25.15 to $27.30. Bell Potter and Morgans analysts also lifted their target prices, to $29.00 and $30.00 respectively.
However, Bell Potter analysts downgraded the company to 'hold' from 'buy' as it marked the company at close to fair value. It noted that it remained attracted to Brickworks' property development pipeline and around 50% short-weighted average lease expiry (WALE) book in a supply constrained Western Sydney market.
The company's share price was down 0.78% to $28.09 in early trading on the ASX.
The context: Brickworks attributed its weak first-half result largely to property devaluations and a losses on property sales. Managing director Lindsay Partridge warned that the company's order intake is softening and conditions are expected to become more challenging for the remainder of the 2024 financial year.
The sources: Jarden research, UBS research, Macquarie research, Bell Potter research, Morgans research
