Net profit was ahead of Credit Suisse forecasts in the September quarter, with the company outperforming on margin in North America. FY20 net profit guidance has been raised to US$340-370m.
The company has emphasised it wants to run a growth business and has, therefore, not raised long-term earnings margin targets for North America.
Hence, increased investment from the second half should be expected and Credit Suisse models elevated margins for 18 months before investment catches up.
The broker increases the target to $29.45 from $28.90 and retains an Outperform rating.
Target price is $29.45.Current Price is $27.66. Difference: $1.79 – (brackets indicate current price is over target). If JHX meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).