Credit Suisse downgrades the European building materials sector to market weight from overweight, saying it expects core fundamentals – volumes, prices and margins – to remain challenged. It says these risks are not reflected in valuations. "In contrast to industry optimism, we believe the cement pricing outlook remains highly uncertain and expect the magnitude of price increases to be insufficient to cover cost inflation of 3% fully."
The house downgrades CRH to underperform from neutral and cuts target to EUR12 from EUR13. It also cuts HeidelbergCement to underperform from outperform and lowers target to EUR29 vs EUR40, noting its exposure to countries that could experience a decline in volumes, such as the UK and Benelux.