Brickworks shares gain as Bell Potter upgrades to 'buy'
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The news: Brickworks shares climbed on the ASX after Bell Potter upgraded its rating on the construction materials supplier.
The numbers: Brickworks shares rose 2.9% to $27.05 by 2pm AEDT.
Bell Potter upgraded its recommendation on the company from 'hold' to 'buy', and increased its 12-month target price from $31 to $32.
The context: Bell Potter analyst Sam Brandwood said that it is an "opportune time" to consider Brickworks' potential pathway for a valuation uplift, as Australia approaches a potential interest rate pivot point.
Brandwood expects changes in interest rates to have a "meaningful impact" on Brickworks' earnings per share, with a 50 basis point cut equivalent to an annualised 3% to 4% upgrade in FY25.
Meanwhile, Brickworks' property value continues to be supported by market rent growth, Brandwood said, with a "modestly positive" half-on-half property revaluation coming as "a pleasant surprise".
Bell Potter downgraded Brickworks in September, after the Sydney-based group swung to a statutory loss in the 2024 financial year and unveiled plans for temporary plant closures in response to subdued building activity across Australia and North America.
What they said: "With building products earnings and property value now arguably looking at or close to the bottom we continue to see further value in Brickworks, however have downgraded to 'hold' in accordance with our rating structure," Brandwood said in September.
The source: Bell Potter research
