Shares in CRH (LON:CRH) have jumped more than one percent in London this afternoon, outperforming the broader UK market, as analysts at HSBC lifted their price target on the shares, pointing to the group’s attractive exposure to US growth. The upbeat comments come after the FTSE 100 company recently snapped up a cement business in the US.
As of 13:37 BST, CRH’s share price had added 1.31 percent to 2,754.00p, outperforming the benchmark FTSE 100 index which has slipped marginally into the red and is currently 0.20 percent worse off at 7,298.75 points. The group’s shares have added more than seven percent to their value over the past year, but are down by some two percent in the year-to-date.
HSBC reiterated its ‘buy’ rating on CRH today, while lifting its price target on the shares from 3,700p to 3,900p, arguing that the company offers investors attractive exposure to US growth as part of a cabal of cement companies predicted to generate strong free cash flow and profit growth in the coming three years.
Sharecast quoted the analysts as explaining that they expect CRH to benefit from US exposure as it takes 52 percent sales from America, and from European housing, particularly its 11 percent of sales from the Netherlands. A 19-percent enhancement in earnings per share in 2018 from the net €1.4-billion investment activity in the year to date “has also improved the risk adjusted growth potential of the group and demonstrates the value accretion potential in the broad product portfolio”.
The comments came after CRH recently disclosed that it had reached an agreement to acquire Kansas-headquartered Ash Grove Cement for $3.5 billion. The transaction is expected to close around the end of the current year.