The US housing market has been weakening for several months but the broker had assumed James Hardie could still grow in a soft market. Now the broker sees this as more difficult as the challenges from lower housing activity make it harder for the company to predict volume growth. Margin expectations have been cut.
James Hardie previously thought input cost pressures would ease but now the opposite appears top be the case. In a declining market with rising cost pressures, the broker expects the share price to languish but retains Buy on a longer term view. Target falls to $22.00 from $24.40.
Target price is $22.00.Current Price is $16.90. Difference: $5.10 – (brackets indicate current price is over target). If JHX meets the UBS target it will return approximately 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).