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(Sharecast News) - Canaccord Genuity cut its target price on Brickability to 77p from 93p on Wednesday, citing a softerforlonger outlook for UK housebuilding and repair, maintenance and improvement markets.
The broker said weaker distribution volumes, inflationary pressure and a more cautious view on projectbased contracting had prompted 17% reductions to its FY27 adjusted pre-tax profit and earnings per shares forecasts, with further trims thereafter.
Canaccord said Brickability still expects a resilient first half, with H1 revenue seen down 1.1% at £343.1m and adjusted underlying earnings falling 6.3% to about £25.5m, while net debt rose following the Jacksons acquisition.
The firm's design and install division continued to deliver strong, highermargin growth, underlining the benefits of diversification into regulatory, infrastructure and specificationdriven markets, with Canaccord now expecting the unit to contribute more than 40% of group trading EBITDA in FY27.
However, ongoing weakness in new housing starts and RMI activity remains the main drag, with higherforlonger interest rates also clouding visibility on contracting work. Brickability now expects subdued conditions in these markets to persist, cutting FY27 adjusted EBITDA guidance to roughly £45m - around 11% below prior consensus.
Canaccord reduced FY27 adjusted EBITDA estimates by 10% to £44.7m, lowered FY28 EPS by 14% and trimmed FY29 by 3%, while forecasting FY27 leverage of 2.0x. Despite the downgrade, the Canadian bank reiterated its 'buy' rating on the stock, arguing the current valuation understates the resilience of Brickability's evolving earnings mix, capitallight model and mediumterm recovery potential.
Analysts at Berenberg cut their rating on Johnson Matthey to from 'buy' to 'hold' on Wednesday, saying their earlier bullish thesis had largely played out and that nearterm valuation upside now looked limited.
Berenberg said its call had been based on the stock's correlation with gold proxies and the prospect of margin gains in Johnson Matthey's clean air unit, both of which had supported shares yeartodate, even if the roughly £475m reduction in the sale price of its catalyst technologies unit had capped upside.
The German bank flagged several reasons for caution, noting that the appeal of the "long gold and PGMs trade" had faded and that risks to vehicle production- with most cars bought on credit - left it sceptical about further underlying earnings upgrades. Recent warnings from European OEMs, including Mercedes, and a derating among truckmakers such as PACCAR added to its concerns.
Higher oil prices, driven by Middle East conflict, could also accelerate the shift from internal combustion engines to EVs, Berenberg noted, weighing on clean air volumes. It also noted that valuation support had weakened as Umicore's cobaltrelated pullback left the stock trading at a roughly 1x forward enterprise value/underlying earnings premium to its peer group.
Berenberg, which raises its target price on the stock from 2,300p to 2,550p, added that estimate changes reflected lower assumed ICE sales and FX headwinds, partly offset by the recent stock consolidation. Berenberg also stated that FY27 EBIT consensus looked secure, though current metals prices might prompt trims to PGM Services forecasts for FY28.
Reporting by Iain Gilbert at Sharecast.com