Reece stocks surge after Macquarie upgrades position
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The news: Plumbing parts supplier Reece had seen its share price spike after Macquarie analysts upgraded their position on the stock from underperform to neutral.
The numbers: At 3:37pm AEDT, shares in Reece had lifted 13.6% to $12.47. Macquarie analysts lifted their target price on the stock from $10.10 to $11.
On Friday, Reece reported sales revenue of $2.41 billion in the first quarter for FY26, up 8% on the previous corresponding period, although EBIT declined 18% to $129 million and EBITDA fell 8% to $222 million.
The context: Reece issued a trading update on Friday that highlighted “firmer than expected” US revenue trends, according to Macquarie analysts. Although this is partly due to foreign exchange benefits that are expected to fade.
The analysts upgrade their position on the stock because they believe “the worst is largely behind [Reece]”. Staffing costs “clearly remain a challenge” but the analysts anticipate this will start to ease.
While they note that “market conditions remain tough and competitive complexities remain” the analysts said valuation — “near historic lows” — and earnings per share momentum “both seem close to an ebb”.
Citi analysts said the trading update was “largely in line” with expectations but said it "should ease some concerns, given positive [like-for-like] sales momentum in ANZ, and only minimal [low single digit] declines in US”.
The sources: Macquarie research, Citi research, ASX
