Why the Brickworks (ASX:BKW) share price is soaring higher today

It isn’t only ASX big bank shares that are soaring higher today. The Brickworks Limited (ASX: BKW) is also surging higher to become the best performing large cap this afternoon.
The post Why the Brickworks (ASX:BKW) share price is soaring higher today appeared first on Motley Fool Australia. –

woman holding flagpole on top of peak against backdrop of city and stock chart

It isn’t only ASX big bank shares that are storming higher today. The Brickworks Limited (ASX: BKW) share price is also surging and is the best performing large cap this afternoon.

Shares in the building materials group rallied 6.8% to $19.95 during lunch time trade and is on top of the S&P/ASX 200 Index (Index:^AXJO) leader board.

That’s ahead of the second-best performer, the Westpac Banking Corp (ASX: WBC) share price with its 6.5% gain and National Australia Bank Ltd. (ASX: NAB) share price on a 6.4% increase.

ASX big bank stocks are racing ahead on news that the federal government is planning on winding back responsible lending rules. This will make it much easier for banks to lend.

Broker upgrade sends Brickworks share price racing

In Brickworks case, the outperformance of the BKW share price coincides with a broker upgrade following its full year results.

Morgans upgraded the stock to “add” from “hold” as Brickwork’s FY20 results came in ahead of expectations.

While group earnings before interest and tax (EBIT) fell 34% to $206 million, that was still above Morgans’ estimate of $193 million.

“Overall, the results for the operational Brick businesses (particularly 2H results from Building Products Australia) were better than feared and Property earnings also slightly beat expectations,” said the broker.

Building activity showing signs of recovery

This was enough to offset weaker investment earnings contribution from Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Another positive was the outlook from Brickworks. The industry is doing it tough as the COVID-19 pandemic limits construction activity but there’s light at the end of the tunnel for the group’s Building Products Australia (BPA) division.

“Clearly, risks remain to activity levels in the largest detached housing markets of NSW and VIC (c60-65% of BPA revenue), with HomeBuilder proving less effective in Sydney and the impact of Government lockdowns in Melbourne remaining uncertain,” added Morgans.

“Nonetheless, BKW noted it’s possible that building activity across most of Australia could be stronger than expected over the next 6-12 months.”

North America a mixed bag

The group’s North American operations also stands to benefit from cost cutting initiatives in FY20 and recent acquisitions of Redland Brick and Sioux City Brick.

However, slowing non-residential and multi-res (higher margin) markets in NA could drag.

What is the BKW share price worth?

Nonetheless, this isn’t stopping Morgans from lifting its price target on the stock to $19.98 from $18.24 a share.

With the big run-up in the BKW share price though, this doesn’t leave much meat on the bone for investors.

Those looking for better returns may want to read this report from the experts at the Motley Fool. Follow the link below to find out more.

These stocks could rocket in a Post-COVID world (FREE STOCK REPORT)

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 Brendon Lau owns shares of National Australia Bank Limited and Westpac Banking. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. 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 Why the Brickworks (ASX:BKW) share price is soaring higher today 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!