James Hardie stock downgraded by CLSA on weak performance and guidance

Investing.com - CLSA downgraded James Hardie Industries (NYSE:JHX) (JHX:AU) from Hold to Underperform and slashed its price target to AUD26.00 from AUD39.50 following disappointing quarterly results. The stock, currently trading at $19.78, has fallen over 31% in the past week, with InvestingPro data showing seven analysts revising earnings expectations downward.

The building materials company reported weaker-than-expected first-quarter fiscal 2026 performance and provided soft guidance for the full year, triggering a sharp sell-off in its shares, according to CLSA.

The research firm noted that initial optimism surrounding James Hardie’s recent merger with Azek has quickly dissipated just one month after the transaction’s completion.

CLSA cited customer destocking due to high new home inventories as a significant demand headwind for the company, suggesting this trend might persist despite potential upcoming interest rate cuts.

The downgrade also reflected concerns about James Hardie’s growth prospects, with CLSA pointing out that key competitors have continued to outperform the company, implying market share losses.

In other recent news, James Hardie Industries reported a 29% decline in its first-quarter underlying net profit after tax compared to the previous year, missing consensus forecasts by 19%. This has led to several analysts adjusting their outlook on the company. UBS downgraded the stock from Buy to Neutral, citing the slump in North American volumes and reduced its price target significantly to AUD36.00. Meanwhile, Morgan Stanley (NYSE:MS) maintained its Overweight rating but lowered its earnings per share estimates by 19-43% for fiscal years 2026-2028, aligning with the company’s FY26 guidance.

BofA Securities also revised its price target downward to $23.70 from $32.80, following a 20% reduction in its FY26 EBITDA forecast. Truist Securities cut its price target to $25.00, maintaining a Buy rating despite weak demand in North America. Jefferies followed suit by lowering its price target to $30.00, describing the company’s fiscal 2025 first-quarter results and guidance as softer and weaker than expected. These developments reflect a cautious outlook among analysts due to the company’s recent performance and guidance.

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