The third quarter result were slightly softer than Morgan Stanley expected. Primary demand growth again disappointed, although the broker questions whether there was more of an impact from the weather than management acknowledged.
All this has been eclipsed by a strategy update and ambitious three-year targets, the broker suggests. For the first time management has targeted a cumulative US$100m in manufacturing cost reductions over the three years.
Morgan Stanley believes the current share price is an attractive position from which to build a stake in a high quality business and reiterates an Overweight rating. Target is $20. Industry view is Cautious.
Target price is $20.00.Current Price is $16.38. Difference: $3.62 – (brackets indicate current price is over target). If JHX meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).