Credit Suisse describes the drop in profitability in the latest update as “stunning”, with margins down -7-10%, and despite little apparent impact from the pandemic on revenue.
The broker assesses, in Australia, the margin decline was driven by operating leverage, disruptions to plants, pricing and mix. North America was affected by the working down of inventory and disruptions as well.
The broker downgrades to Neutral from Outperform, lacking confidence that this margin destruction will reverse any time soon. Target is reduced to $2.65 from $3.70.
Sector: Materials.
Target price is $2.65.Current Price is $2.46. Difference: $0.19 – (brackets indicate current price is over target). If BLD meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
