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Investing.com - Barclays has upgraded Heidelberg Materials AG (ETR:HEI) (OTC:HDELY) from Equalweight to Overweight, while raising its price target to EUR261.00 from EUR194.00.
The upgrade comes as Barclays notes Heidelberg Materials has experienced a relative de-rating compared to competitor Holcim in recent months, creating what the firm describes as "an attractive valuation entry point." The bank points out that Heidelberg has seen only a 0.4x EBITDA turn rerating since the end of July, compared to a 1.6x rerating for Holcim .
Barclays highlights that Heidelberg’s facilities are "most favourably positioned on the EU CO2 cost curve," potentially allowing the company to capture greater price-cost spreads from the EU Emissions Trading System. The firm estimates approximately EUR6 per ton in cost savings, assuming pricing is set by the 80th percentile of the cost curve.
The research note indicates Heidelberg should benefit from eventual volume recovery in its core Western and Northern European markets as demand normalizes. This geographic positioning provides additional upside potential as construction activity rebounds.
While Barclays acknowledges the U.S. cement outlook is not particularly strong, it expects Heidelberg’s aggregates pricing to remain resilient into next year, supported by infrastructure activity and potential recovery in non-residential construction, with Dodge momentum showing improving trends in recent months.
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