Credit Suisse resumes coverage with an Outperform rating and $7.20 target. The broker calculates there is 20-35% upside to consensus earnings expectations if the company’s FY23 target is met. Australia is the key opportunity as well as steel.
The broker assesses Fletcher Building is entering the second phase of its FY19-23 plan, designated as “growth”, in a strong position. A restructuring was completed in June 2020 and only NZ$400m of legacy construction projects remain.
In the near term end markets are positive and the main risk exists with the withdrawal of government support, if this means a large decrease in demand.
Target price is $7.20.Current Price is $6.60. Difference: $0.60 – (brackets indicate current price is over target). If FBU meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).