Canaccord Genuity lowers target price on Brickability

(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.

Reporting by Iain Gilbert at Sharecast.com