Why this top broker sees 50%+ upside to the Boral share price

One broker is optimistic about the outlook for the construction materials giant.
The post Why this top broker sees 50%+ upside to the Boral share price appeared first on The Motley Fool Australia. –

The crash in the Boral Limited (ASX: BLD) share price could spell opportunity with a leading broker highlighting a 50%-plus potential gain for the building materials supplier over the next 12 months.

The news will be a relief to embattled shareholders. The Boral share price has tumbled by more than 60% in the past year and it’s now hovering around a two-year low.

In contrast, the S&P/ASX 200 Index (ASX: XJO) is down a more modest 11% over the period.

Why the Boral share price got plastered

There are several reasons why investors have shunned Boral shares. The power crisis is one that’s weighing on sentiment as Boral is a big energy user.

The war in Ukraine sent power prices surging and that’s contributing to rampant inflation. This, in turn, is forcing central banks, including ours, to pull the handbrake by lifting interest rates.

Herein lies the second whammy for the Boral share price. Higher interest rates are rapidly cooling the housing construction market.

Building industry in trouble

There have also been a number of high-profile builders collapsing or coming close to bankruptcy in recent times. These include Probuild and Metricon.

There are warnings that more could be about to fall over as the sharp rise in building costs push many to the wall. These home builders can’t pass on rising costs to customers as the properties are sold through fixed-priced contracts that were signed before the inflation genie escaped from its bottle.

That puts Boral in an unenviable position. Demand for its products will be hit by a slowing housing construction market, while there’s a risk of bad debts if builders go under.

ASX building shares underperforming

The Boral share price isn’t the only one under the pump. Construction peers Adbri Ltd (ASX: ABC), Reece Ltd (ASX: REH), and James Hardie Industries plc (ASX: JHX) have also fallen out of favour.

But it isn’t all bad news. The analysts at Macquarie believe the sell-off may be overdone despite acknowledging the headwinds.

The broker said:

The sector has de-rated significantly as macro conditions deteriorate. While not a conducive context, we maintain a focus on stocks with alternative growth potential, R&R [remodelling and restoration] and infrastructure exposure.

How much is the Boral share price worth?

In that context, Macquarie reiterated its “outperform” recommendation on the Boral share price. It’s 12-month price target on the shares is $4.05 each.

Other shares in the sector that the broker likes include James Hardie, Adbri and Reliance Worldwide Corporation Ltd (ASX: RWC).

The post Why this top broker sees 50%+ upside to the Boral share price appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right 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 over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of January 12th 2022

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

‘Global leader at attractive prices’: expert names 2 ASX shares to buy now
5 things to watch on the ASX 200 on Tuesday
Will Westpac shares really pay a 9.6% dividend yield next year?
Why are ASX 200 bank shares having such a cracking start to the week?
Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Brendon Lau has positions in Macquarie Group Limited, Reece Australia Limited, and Reliance Worldwide Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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.

  • This field is for validation purposes and should be left unchanged.

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

Share With Your Friends

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, 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.

Act Fast - Promotion Ends In
Click Here To Get Started
Act Fast - Promotion Ends In
Click Here For More Info