On Thursday, RBC Capital initiated coverage on Ibstock Plc (IBST:LN) (OTC: IBJHF) stock, the UK's leading clay brick manufacturer, with an Outperform rating and a price target of GBP2.00.
The firm highlighted the company's extensive production network across the UK and its top position in profitability within the sector. RBC Capital's outlook is buoyed by the anticipation of a cyclical upswing in housebuilding activities and the expected increase in earnings as a result of nearly completed capital expenditure aimed at growth.
The analyst from RBC Capital forecasts a compound annual growth rate (CAGR) in adjusted earnings per share (EPS) of 31% from 2024e to 2028e. Despite projecting that the 2024e adjusted EPS will be approximately 65% below the figures from 2022, the firm expects earnings momentum to pick up in the second half of the year. The analyst's projections are 11% higher than the 2026e consensus, reflecting a stronger anticipated earnings recovery for Ibstock.
RBC Capital's price target of 200p is derived from a discounted cash flow (DCF) analysis, which reflects the firm's confidence in Ibstock's future performance. The analysis suggests that the company's strategic investments and market position will lead to significant earnings growth in the coming years.
The positive outlook from RBC Capital comes as Ibstock continues to invest in its operations and capitalize on the expected recovery in the UK housebuilding sector. With a broad production footprint and a reputation for high profitability, the company appears well-positioned to benefit from the industry's cyclical upturn.
As the market processes this new coverage, Ibstock's shares may respond to the positive assessment and price target set by RBC Capital. Investors and market watchers will likely keep a close eye on the company's performance indicators to see if it meets or exceeds the growth expectations laid out by the firm.
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