CSR (ASX:CSR) share price is 5% lower today despite broker upgrade

The CSR Limited (ASX: CSR) share price has been steadily falling today despite a broker upgrade from Goldman Sachs. Let’s take a look.
The post CSR (ASX:CSR) share price is 5% lower today despite broker upgrade appeared first on Motley Fool Australia. –

mesoblast share price falling represented by cartoon of little business men falling off broken graph arrow

Broker Goldman Sachs has upgraded building products manufacturer CSR Limited (ASX: CSR) to neutral. The revised 12-month target price has now increased by 20% to $4.64, from $3.86 previously. However, the CSR share price has been steadily dropping today, trading down 5.12% to the price of $4.72 at the time of writing. 

Why was CSR upgraded?

Goldman Sachs noted that CSR’s earnings have significant exposure to residential construction activity, and historically its share price is closely correlated to the housing cycle. 

However, the broker cited the recently released data for building approvals had indicated an improvement in the property sector. The data showed a rise in approvals for detached houses and private sector dwellings in the September quarter.

As a result, Goldman Sachs predicted that CSR’s building products revenue would improve modestly from a decrease of 6% in FY20, to a decrease of 5% in FY21.

The broker also expected a $20 million reduction in CSR’s selling, general administrative (SG&A) expenses in FY21, as a result of its ongoing cost restructuring programs. This ongoing “self-help” program is expected to improve CSR’s margins in FY21 and beyond.

Goldman Sachs also said the depreciating Australian dollar would have a positive impact on CSR’s bottom line, especially in its glass & aluminium unit where it competed against imported products. 

In summary

Goldman Sachs has outlined three important factors for CSR’s medium term recovery – a quicker-than-expected residential housing recovery, a weaker Australian dollar, and its continuing cost reductions programs.

CSR’s share price performance

The CSR share price has experienced a wild ride in 2020. It began the year trading at $4.58 before dipping to its nadir at $2.82 in March as COVID-19 impacts took hold. It has since bounced back to today’s level of $4.72, a modest 3% increase YTD.

At today’s price, CSR has a market cap value of $2.4 billion.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post CSR (ASX:CSR) share price is 5% lower today despite broker upgrade appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!