Belgian investor Albert Frere continues to ease his holding in French cement giant Lafarge SA upwards but a full-blown takeover attempt would be out of character with analysts saying there’s still plenty of steam behind Lafarge’s shares as the company continues to profit from the strong global demand for building materials.
Lafarge shares climbed just 0.6% Monday on news that Frere’s Groupe Bruxelles Lambert (GBLB.BT) had again raised its Lafarge stake. That gain contrasted with the much larger share price movements seen throughout the year as Frere steadily built up his stake from 6.5% in January to 15.001% now.
"Lafarge shares had little reaction to GBL’s announcement this week because Frere already had a significant stake," said Julien Picard, building materials analyst at Fideuram Wargny in Paris.
GBL declined to comment. Lafarge continues to view Frere’s stake-building as a sign of confidence in the company’s strategy, the same stance Lafarge has taken throughout the year, spokeswoman Stephanie Tessier said.
Things were much different in January, when, after months of quietly scooping up stock on the market, GBL revealed an initial holding of 6.5%.
Lafarge shares jumped 9% in the days immediately afterward, as investors bet that Frere’s consummate deal-making skills would work their magic again. The stock is up 46% this year, compared with a 17% rise in the broader CAC 40 index and a 37% increase for the DJ Stoxx Construction and Materials index.
Despite those gains, 10 of 17 analysts polled by financial consultants JCF still have buy or overweight ratings on Lafarge, compared to only two with sell ratings.
Analysts at a variety of large brokers, including Credit Suisse, Exane BNP Paribas, and Societe Generale, expect the stock to hit EUR120 over the next year, implying 7.4% upside from Thursday’s EUR111.70 level, and Citigroup even targets EUR121.
Further gains will depend on Lafarge continuing to profit from the strong global demand for building materials that has driven an 18% rise in revenue through the first nine months of the year and a 29% rise in operating profit.
Analysts polled by JCF expect Lafarge to report revenue of EUR18.1 billion this year, up 13% from 2005, while growth next year is expected to slow to a more sustainable 5%.