On Friday, Deutsche Bank updated its outlook on Holcim Ltd (SIX:HOLN:SW) shares, a leading global construction materials company. The bank's analyst increased the price target on the stock to CHF81.00, up from the previous CHF78.00, while maintaining a Hold rating on the stock.
The adjustment comes in anticipation of the company's second-quarter performance. The analyst anticipates a slight decline in organic sales by 0.4% year-over-year for the second quarter. This forecast suggests a modest drop from the first quarter when organic sales remained flat.
The expected decrease in sales is attributed to a combination of weak volumes, which have been affected by adverse weather conditions in the United States and Europe, and challenging comparable figures from the US roofing sector. Additionally, a minor reduction in the number of working days is expected to contribute to the lower volume.
Despite these challenges, the report notes that the impact on sales volumes is partially mitigated by price gains. Moreover, the scope impact is described as neutral, with minor acquisitions known as bolt-ons being offset by asset disposals in Africa.
The analyst also highlighted that the negative impact of foreign exchange rates on Holcim's performance is predicted to be less severe in the second quarter compared to the first quarter, improving from -5.8% to -1.8%. This less negative foreign exchange influence could provide a slight cushion to the anticipated headwinds facing the company.
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