RBC Capital Initiates Coverage on Forterra Plc Stock with Outperform Rating and GBP2.10 Price Target
In a recent development, RBC Capital has initiated coverage on Forterra (NASDAQ:) Plc (FORT:LN) (OTC: FTTRF) stock, a leading UK clay brick manufacturer, with an Outperform rating and a price target of GBP2.10. The analysis highlights the company's potential for recovery and growth in the face of recent challenges.
Forterra, known as the UK's second-largest clay brick producer, primarily caters to volume housebuilders. Despite facing a management change in 2023 during a cyclical downturn and increased leverage, the company is now focused on restoring earnings to pre-2022 levels and capitalizing on its nearly completed £135 million capital expenditure for growth.
RBC Capital's assessment indicates that Forterra's strategic initiatives could yield significant returns, with base and upside scenarios projecting around 30% and 70% returns, respectively. This is based on an expected adjusted earnings per share (EPS) compound annual growth rate (CAGR) of 41% from 2024 to 2028.
The Outperform rating reflects confidence in Forterra's ability to outperform market expectations, while the GBP2.10 price target underscores the firm's optimism about the value of the company's shares. This positive outlook is supported by Forterra's investments in expansion and the anticipated positive impact on earnings.
This bullish stance from RBC Capital comes at a crucial juncture for Forterra as it strives to achieve strong financial performance in the years ahead. The company's focus on returning to previous earnings levels and generating incremental returns post-investment is key to its future prospects.
In conclusion, investors may consider Forterra stock as a potential opportunity for significant returns based on RBC Capital's optimistic outlook and the company's strategic growth plans. It is important to monitor how Forterra executes its strategies and whether it can deliver on the projected earnings growth to realize the potential returns highlighted in the analysis.