NEW YORK (dpa-AFX) - The US investment bank Bank of America (BofA) is cautious about the European building materials sector in 2024. In an industry study published on Wednesday, analyst Arnaud Lehmann pointed to the recent significant price gains in building materials stocks and at the same time riskier margin prospects.

Investors, however, seemed to be assuming an ideal environment, characterized by a recovery in volumes, robust pricing and lower production costs, which would support margins. However, this seems rather optimistic. Lehmann himself expects continued pressure on volumes and a price/cost dynamic that could also turn negative. This would then result in lower margins.

Lehmann downgraded the shares of Holcim, Rockwool, Ashtead and Saint-Gobain. This is offset by an upgrade to "buy" for Heidelberg Materials, with a price target raised from 78 to 105 euros.

He considers a bid for the US company Summit Materials to be unlikely, which in turn increases the probability of additional share buybacks. Lehmann also rates Heidelberg's fixed cost management positively. In addition, the average market estimates for 2024 and 2025 are not very demanding for the DAX company and the market could gradually begin to reward Heidelberg Materials for its decarbonization efforts.

Overall, Lehmann prefers stocks in the sector of companies with self-help potential, i.e. those that can take countermeasures with their own entrepreneurial measures, offer a special capital market story and are attractively valued. His "top picks" are CRH, Buzzi and Kingspan.

According to the "Buy" rating, Bank of America assumes that the share will yield a total return of at least 10 percent from price gains and dividends within 12 months./ajx/ck/he

Analyzing institute Bank of America.

Publication of the original study: 10.01.2024 /00:31 EST First distribution of the original study: 10.01.2024 /00:31 / EST