Davy lowers CRH to 'neutral'
Shares in CRH now have "limited upside" and are expensive following a recent rally and a tough trading year ahead, according to Davy Stockbrokers.
Davy downgraded the stock to 'neutral' yesterday, warning that global building materials firms are likely to experience difficult conditions in Europe during 2012. About half CRH's business is derived from Europe and the remainder from the US.
Davy said it was cutting its recommendation on CRH from 'outperform' to 'neutral' on the basis of the stock's high valuation relative to its historical range and to its peers. CRH shares advanced 32pc in the fourth quarter of 2011.
The broker said it was reducing its 2012 earnings per share forecast for CRH by nearly 5pc from 93.1 cent to 88.8 cent. It also cut the 2013 forecast EPS by 5pc. "This largely reflects a more cautious view on the company's European operations," said Davy. "This is offset somewhat by a more positive outlook on the US business as well as a positive impact from a more favourable dollar/euro exchange rate assumption."
CRH shares closed flat in London, where it has its primary listing, at £12.70 yesterday.