UBS Affirms Neutral Rating for James Hardie Industries Amid Analyst Revisions

UBS Group has reaffirmed its neutral rating on shares of James Hardie Industries (NYSE: JHX) in a research report released on August 19, 2023. This decision comes as various investment analysts have recently assessed the company’s stock, with mixed opinions reflected in their ratings and price targets.

On June 27, 2023, William Blair initiated coverage on James Hardie Industries, giving it an “outperform” rating. In contrast, Robert W. Baird lowered its price objective for the company from $32.00 to $25.00, while maintaining an “outperform” rating. Similarly, Truist Financial also adjusted its price target from $35.00 to $25.00, categorizing it as a “buy.”

The fluctuations in analysts’ ratings have led to a diverse range of opinions about the stock. Currently, one analyst has rated James Hardie with a Strong Buy, while eight others have assigned it a Buy rating and one has given it a Hold rating. According to data from MarketBeat.com, the stock holds an average rating of “Buy” along with an average target price of $33.27.

Current Stock Performance and Financial Metrics

As of August 19, 2023, James Hardie Industries opened at $19.8450. The company maintains a debt-to-equity ratio of 0.51 and a current ratio of 2.10, indicating a solid financial standing. The quick ratio stands at 1.67, reflecting short-term liquidity. The stock has experienced a fifty-two week low of $17.91 and a high of $43.57.

With a market capitalization of $8.53 billion, James Hardie Industries has a price-to-earnings (P/E) ratio of 25.77 and a price-to-earnings-growth (PEG) ratio of 1.72. The company reported its quarterly earnings on August 19, revealing earnings per share (EPS) of $0.29, which fell short of the consensus estimate of $0.36 by $0.07. Revenue for the quarter reached $899.90 million, significantly below the anticipated $982.60 million, marking a year-over-year decline of 9.3%.

Institutional Interest in James Hardie Industries

Recent activity among institutional investors indicates a growing interest in James Hardie Industries. Hudson Bay Capital Management LP increased its stake by an impressive 430.8% during the second quarter, now holding 265,398 shares valued at approximately $7.14 million. Meanwhile, Rexford Capital Inc. acquired a new stake worth $129,000.

In a notable move, Tower Research Capital LLC TRC increased its position by a staggering 95,062.5%, bringing its total to 22,839 shares valued at $614,000. Other investors, including Conversant Capital LLC and Captrust Financial Advisors, have also made significant investments, further contributing to the institutional ownership, which currently stands at 7.96% of the company’s stock.

James Hardie Industries is primarily engaged in the manufacture and sale of fiber cement, fiber gypsum, and cement bonded building products tailored for both interior and exterior construction applications across several markets, including the United States, Australia, Europe, New Zealand, and the Philippines. The company operates through distinct segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products, demonstrating its diverse operational footprint.

As analysts continue to evaluate the potential for James Hardie Industries amidst fluctuating market conditions, the reaffirmation of UBS’s neutral rating serves as a reminder of the complexities involved in assessing investment opportunities in the construction sector.