Analysts were divided yesterday over Boral’s outlook, but the market seems to be voting with its feet. The company posted a bumper 2004, and gave an outlook that exceeded a number of analysts’ expectations, resulting in upgrades to 2005 earnings forecasts. But the stock has slumped 3.7 per cent since to close at $6.98 yesterday.
Perennial Value Management portfolio manager Hugh Giddy said the falls were "a bit mystifying". "It’s classic profit-taking," he said. Investors ran the stock up 30 per cent since mid-May. The question now is whether it will rally to highs; or are recent falls the start of a new trend as the housing cycle in both the US and Australia turns down? From all perspectives, the 2004 result was very strong. "I don’t think long-term investors would be saying it’s time to bale out yet," Mr Giddy said.
UBS analyst Mark Ebbinghaus revised his 2005 earnings forecast to A$394 million, slightly ahead of guidance. Boral’s net profit in 2004 was more than its forecast of A$354 million. "Strong housing activity in Australia and the US helped Boral to report good price, volume and margin increases across the board," he said