Australia's Reliance Worldwide: Citi downgrades stock on margin pressures

Reliance Worldwide

02/05/2022 22:23

** Citi cuts PT on Australian plumbing products maker
Reliance Worldwide Corp's  RWC.AX  stock due to margin pressure
from higher costs, but says Q3 results "resilient" amid
challenging operating environment 
    ** RWC posted 14% jump in 9-mth sales to A$845.2 mln
($595.87 mln) on Friday, but flagged softer margin outlook
    ** Citi cuts PT to A$3.84 from A$4, a 4.7% downside to the
stock's last close, holds "sell" rating
    ** "It appears the ability to cover costs has changed in 3
months represented by the margin downgrade" - Citi
    ** Citi says "we think without official contractual pricing
mechanisms, cost recovery going into FY23 will continue to be
challenging"
    ** Sees uncertainty in UK sales and says channel has not 
fully normalized yet with sales in the region slowing from the
half
    ** Citi adjusts down market growth in FY24, due to higher
interest rates
    ** Nine of 12 analysts rate the stock "buy" or higher, two
"hold" and one "strong sell"; their median PT is A$5.30 –
Refinitiv data
    ** Stock down 35.7% this year, as of last close


 ($1 = 1.4184 Australian dollars)

 (Reporting by Savyata Mishra in Bengaluru)
 ((Savyata.mishra@thomsonreuters.com))