Barclays sees infrastructure as key to bridge gap between Europe and U.S.

Compagnie de Saint Gobain SA

21/03/2025 13:51

** "A new era is emerging for the EU, and infrastructure is key to bridge the gap" between Europe and the U.S., Barclays says in a note on European construction, infrastructure and building materials

** Public investment can leverage significant private funding in infrastructure, the broker says, seeing sustained double-digit growth in civil works in the EU as "within reach"

** Barclays points out that 1.2-1.4 trillion euros is 7-8% share of GDP for the EU, to find and invest in areas yielding good returns/boosting competitiveness, which it sees possible

** It sees further optionality from EU loosening fiscal discipline where relevant, mobilising firepower from Member States with healthy balance sheets, and direct EU leverage

** The broker sees that funding infrastructure should not be an issue in the EU given significant firepower/low leverage in many Member States (Germany, Nordics, Netherlands, Eastern Europe), the EU's funding capability and, most importantly, the returns at stake

** It sees stronger than perceived growth ahead in civil works/contracting, with supply-demand tightness to structurally benefit contractors

** Its top pick among contractors is Eiffage FOUG.PA, but says that Vinci SGEF.PA should benefit as well, (both "overweight"-rated)

** The brokerage is more cautious on building materials / building products; sees selective opportunities in heavyside while turning even more cautious on lightside

** Barclays downgrades Rockwool ROCKb.CO to "equal-weight" from "overweight" citing more limited upside to price target and little to no exposure to infrastructure

COMPANY
NEW RATING
OLD RATING
ACS ACS.MC
equal-weight
equal-weight
Buzzi BZU.MI
overweight
overweight
Eiffage
overweight
overweight
Geberit GEBN.S
underweight
underweight
Heidelberg Materials HEIG.DE
equal-weight
equal-weight
Hochtief HOTG.DE
equal-weight
equal-weight
Holcim HOLN.S
underweight
underweight
Kingspan KSP.I
equal-weight
equal-weight
Rockwool
equal-weight
overweight
Saint-Gobain SGOB.PA
overweight
overweight
Sika SIKA.S
underweight
underweight
Vicat VCTP.PA
overweight
overweight
Vinci
overweight
overweight

($1 = 0.9231 euros)

 (Reporting by Marta Frąckowiak)

 ((marta.frackowiak@thomsonreuters.com))