Stifel more cautious on construction, flags sector rotation ahead
15/04/2024 09:24
** Stifel says it turns more cautious on the construction
sector, expecting a sector rotation to exacerbate the typical
seasonal volatility
** The broker says 2024 should be a year of two halves in
terms of fundamentals, with a stronger H2 off-setting a weaker
start to the year
** "Despite that we continue to see significant upside,
especially amongst European housing exposed light-side value
stocks," it says
** It upgrades Eiffage FOUG.PA to "buy" from "hold",
saying the stock's discount to peers now seems overdone given
the fundamentally strong business as well as a growing interest
in the name and improving communication
** It downgrades CRH CRH.N , Ferrovial FER.MC and
Hochtief HOTG.DE to "hold" from "buy"
** It sees limited upside for CRH, noting it is a
predominantly North American infrastructure exposed heavy-side
stock, with a "surprisingly" less defensive seasonality compared
to the sector
** Ferrovial stock may have reached fair value, Stifel
notes, deeming the risk-reward ratio "less compelling" on some
question marks such as the ongoing portfolio rotation, the
Heathrow divestment
** It views Hochtief's risk-reward profile as less appealing
in sight of a riskier stage of its strategy potentially
including new equity investments
(Reporting by Linda Pasquini)
((linda.pasquini@thomsonreuters.com))