Brickworks shares lower as analysts make downgrades
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The news: Shares in Brickworks slumped on the ASX, a day after the construction materials supplier closed as the best performing stock across the ASX 200.
The numbers: Brickworks shares were down 0.8% to $28.29 by 2:40pm AEST. The stock fell more than 4% earlier in the session, having jumped 7.6% on Thursday despite swinging to a statutory loss in FY24.
Citi kept its 'buy' rating but cut its target price from $37.50 to $36.60. Jarden retained its 'neutral' rating but lowered its target price from $30 to $28.50.
Bell Potter downgraded its rating on Brickworks from 'buy' to 'hold', and slashed its earnings per share forecasts by 10% in FY25 and 13% in FY26. However, it raised its target price from $29.50 to $31.
The context: Citi analysts noted that while the near term environment for building products looks tough, the outlook could improve with lower rates. Brickworks investment division primarily derives earnings from Soul Patts, which derives a largest potion of earnings from it equity and private investments, the analysts said, and the reduction in rates should benefit these as well.
Jarden analysts called Brickworks' full-year earnings as a "strong operational result ahead of consensus", even as construction activity remains soft across Australia and North America.
They said the company's full-year EBITDA of $157 million came in 14% of consensus forecasts, driven by better-than-expected cost control and restructuring efficiencies across operating assets. Meanwhile, they noted that Brickworks saw stabilisation of industrial property valuations and rental growth as demand for prime industrial space remains strong.
Bell Potter analyst Sam Brandwood said that Brickworks delivered a "robust result" with few major surprises.
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.
The sources: Jarden research, Bell Potter research, Citi research
