Citi believes the sell-off after the second quarter results is overdone. US housing markets may have struck a soft patch but momentum is recovering and margin should be restored in the second half.
Weather disruptions, US elections and rising interest rates were cited as likely factors that slowed activity. The company has reduced FY19 net profit guidance to US $280-320m, down by -6% at the mid point.
Citi maintains a Buy rating and reduces the target to $21 from $25.
Target price is $21.00.Current Price is $16.85. Difference: $4.15 – (brackets indicate current price is over target). If JHX meets the Citi target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).