LONDON (dpa-AFX) - The British bank Barclays has become more optimistic for the European building materials heavyweights Heidelberg Materials and Buzzi. In contrast, the French company Vicat and Holcim from Switzerland have been assessed more pessimistically than before.

The stronger pricing power of the companies is likely to be permanent and margins will continue to rise in view of falling energy costs, wrote analyst Tom Zhang in an industry study published on Tuesday. Supply discipline and demand trends in the infrastructure sector, especially in western and southern Europe, are also contributing to this. At the same time, the continued subdued volumes are less important than in previous cycles. Investors are also more rational and valuations have become attractive against the backdrop of healthy balance sheets.

Zhang raised Buzzi from "Equal Weight" to "Overweight" and the price target from 33 to 42 euros. He upgraded Heidelberg Materials by two places, from "Underweight" to "Overweight" and raised the target price from EUR 70 to EUR 106. He wrote that the valuations compared to the sector, the operational strength of the companies and the geographical positioning spoke in favor of these shares.

Vicat, on the other hand, was downgraded from "Overweight" to "Equal Weight" and the price target was lowered from 42 to 41 euros. Zhang removed his neutral rating for Holcim and downgraded the stock to "Underweight". The new price target is now 61 francs, down from 63 francs.

Zhang compared Heidelberg Materials with Holcim and wrote: "Both have similar earnings stability, so both should also be valued similarly. Although Holcim's margins have been slightly higher than Heidelberg's over the past decade, he said, Holcim is not a more global and better diversified company than Heidelberg Materials.

The Barclays analyst also expects Heidelberg Materials to launch a new €1.5 billion share buyback program soon, following the completion of a three-year buyback program in October 2023.

More value could also be released if Heidelberg Materials were to follow Holcim's example and spin off its US activities, the expert believes. So far, however, there have been no indications of such a plan and no speculation in the press.

In line with their "Overweight" rating, the analysts at Barclays Capital expect the share to outperform other stocks in the sector over the next twelve months./ck/mis/he

Analyzing institute Barclays Capital.

Publication of the original study: 19.02.2024 / 15:24 / GMT First dissemination of the original study: 19.02.2024 / 16:45 / GMT