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Investing.com - JPMorgan has downgraded Reliance Worldwide Corp Ltd (ASX:RWC) stock rating from Overweight to Neutral while reducing its price target to AUD4.35 from AUD5.25.
The downgrade comes despite what JPMorgan described as a "solid FY25 result" for the plumbing supplies manufacturer, with the firm citing elusive end-market recovery as a key concern. JPMorgan now projects markets won’t recover before FY27, with U.S. repair exposure being outweighed by low housing turnover.
In the United Kingdom (TADAWUL:4280), JPMorgan expects the market to trend sideways without a clear turning point, noting that promising indicators from the first quarter of calendar year 2025 have quickly faded. The firm highlighted that below-normal volumes in this market ensure significant leverage once conditions improve.
JPMorgan forecasts a net negative EBITDA impact of US$26 million year-over-year in the first half of FY26, attributing this to lower U.S. volumes, tariffs, and only US$4 million in cost reductions. The bulk of tariff impacts are expected in the first half of FY26, compounded by lagging one-off reversions in other segments, particularly in Asia-Pacific.
Despite operational challenges, JPMorgan acknowledged that Reliance Worldwide is "operationally working hard" and faces a "meaningful opportunity when volumes improve."
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