BLD – Morgan Stanley rates the stock as Equal-weight

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Morgan Stanley suspects the market is finding it difficult to recognise the inherent asset value in the stock. The broker assesses the stock is currently trading at a meaningful discount to both peers and its historical valuation range.

As recent speculation has centred on the possibility of a break-up, which could mean better value, Morgan Stanley analyses some hypothetical scenarios.

The broker envisages an opportunity to reduce gearing and realise value from assets that are non-core. However, the upside value an external party could extract would largely be negated by a traditional 25-30% takeover premium.

Morgan Stanley maintains an Equal-weight rating and target is raised to $5.00 from $4.50. Industry view is Cautious.

Sector: Materials.

Target price is $5.00.Current Price is $5.18. Difference: ($0.18) – (brackets indicate current price is over target). If BLD meets the Morgan Stanley target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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