We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Berenberg lowers target price on Forterra

Fri 26 November 2021 10:41 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Analysts at Berenberg lowered their target price on construction firm Forterra from 300.0p to 280.0p on Friday, citing "limited" near-term organic upside.

Berenberg stated that while it expects housebuilding activity to continue to recover, Forterra was capacity constrained in its clay brick business until 2024/25 for the company's new Desford plant to drive "a significant increase in profitability".

"We forecast for the group to have a small net-cash potion at year-end. However, Forterra's focus on Desford and the £27.0m modernisation of the Wilnecote factory means that it is unlikely to pursue any major M&A, in our view, which limits any potential inorganic upside to the shares over the next 12 months. Moreover, although the new Desford facility will improve returns and add new capacity for the group to meet rising demand, we note that investors will need to wait for this benefit, with the financial contribution only beginning to materialise in 2023 and the full benefit not expected until 2025," said Berenberg.

The German bank, which reiterated its 'hold' rating on the stock, also highlighted that with just 60% of Forterra's energy requirements secured for the 2022 trading year, it thinks that better risk/reward cases can be found elsewhere in the sector.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.


    More stockbroker tips from ShareCast

    Latest economy and stock market articles