Barclays starts coverage on Wienerberger with “overweight,” €42 price target

Investing.com -- Barclays (LON:BARC) has initiated coverage on Wienerberger (VIE:WBSV) with an "overweight" rating and a price target of €42, citing the company’s strong exposure to the recovering European residential construction market and high operational leverage, in a note dated Friday.

Analysts at Barclays noted that despite continued caution on volume recovery for 2025 due to ongoing affordability issues across Europe, recent macroeconomic trends such as a stronger euro, easing inflation pressures, and potential European Central Bank rate cuts are starting to provide a more supportive backdrop. 

According to the report, Wienerberger’s underlying markets remain approximately 15–20% below 2021 levels, with early positive indicators emerging particularly in the U.K., Germany, the Netherlands, and parts of Eastern Europe, regions that collectively account for about 40% of the company’s EBITDA.

The report highlights Wienerberger’s significant operational leverage, emphasizing that minor volume improvements (as low as 5%) could push EBITDA growth close to the 10% consensus projections for 2026-27. 

The company’s cost structure and relatively lower productivity levels, a result of steep volume declines in recent years, further amplify its earnings sensitivity to volume recovery.

Valuation metrics also play a central role in Barclays’ analysis. The stock trades at a roughly 10% discount to its historical EV/EBITDA average and around 50% below the sector average for 2025-27E, compared with a long-term relative discount of 35%. 

Barclays’ analysts argue that the current share price does not fully reflect potential gains from volume recovery or margin improvements, characterizing these as “quasi-free options” for investors.

Barclays also pointed to the company’s ongoing portfolio diversification, supported by disciplined capital allocation through more than 40 acquisitions over the past decade. 

Most of these deals were completed at mid-single-digit EV/EBITDA multiples post-synergies. 

Larger transactions, like the recent acquisition of Terreal, are expected to generate even greater synergies.

In their downside scenario, the analysts estimate a limited revenue growth of 2% and flat margins, leading to a lower valuation of €25 per share.

The upside scenario models a more robust volume recovery and margin expansion, which could push the valuation as high as €50.

Wienerberger presents a compelling investment opportunity based on its relatively low starting point, increased operating leverage, and exposure to key recovering housing markets.