Barclays’ rosiest CRH view sees market value reaching record €38bn
Medium-term outlook positive despite exposure to US market, analysts say
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. Photograph: Brenda Fitzsimons
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.
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.