Barclays’ rosiest CRH view sees market value reaching record €38bn

Analysts at Barclays have named CRH among their top stock picks in Europe, with their most optimistic outlook for the building materials giant pointing to it reaching a record market value of more than €38 billion.

That equates to more than 45 per cent of the combined market capitalisation of the Iseq 20 index of the largest companies listed in Dublin.

In a report published this week, Barclays said the “sluggish performance” of CRH’s stock recently – having fallen by 12 per cent in the past two months – has left the company trading at a deep discount to the investment bank’s €35 per cent price target. The shares traded at as low as €28.32 on Tuesday.

“Among large European building materials [companies], CRH stands out as being the most exposed in the US and its infrastructure sub-market, where the [medium-term] outlook is supportive in our view,” Barclays said, noting that $500 billion (€434 billion) of public spending has been approved at federal and local levels.

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In Europe, CRH’s strong positions in German, Benelux, French and Polish markets “make it particularly well suited” to capture a recovering construction market, which should more than offset the group’s exposure to the “less favourable” UK market, they said.

Barclays' "upside case" for CRH, which reports first-half results on Thursday, points to a share price of €45.90, which implies a market value of €38.2 billion. This assumes US president Donald Trump delivers on his ambitious $1.5 trillion infrastructure spending programme and an acceleration of the recovery in the European market.

The bank’s downside case sees the stock falling to €24 and factors in “a persistent slowdown in the US and sluggish recovery in Europe”.

Analysts at Davy estimate CRH will unveil broadly flat first-half earnings before interest, tax, depreciation and amortisation (ebitda) on Thursday, at €1.1 billion. The first six months of the year is expect to account for less than a third of the group’s full-year result.