Morgan Stanley analyst Andrew Scott upgraded the rating on James Hardie (JHIUF – Research Report) to a Buy today, setting a price target of A$55.00.
Andrew Scott has given his Buy rating due to a combination of factors surrounding James Hardie’s strategic acquisition and market positioning. The acquisition of AZEK is a significant move, valued at $8.75 billion, and comes with a 26% premium to the 30-day VWAP, indicating a strong strategic intent to enhance market share and capabilities. Despite the high acquisition cost, the management’s target of $350 million in synergies, primarily from revenue opportunities, is a positive indicator of potential growth and value addition.
Furthermore, while the transaction may initially appear dilutive, the current share price offers attractive value given the company’s historical P/E averages. The stock’s recent decline makes it an appealing investment opportunity, especially considering the company’s solid fundamentals and potential for medium-term value realization. Scott maintains a price target of A$55, suggesting significant upside potential from the current trading levels.