On Wednesday, RBC (TSX:RY) Capital adjusted its price target for Genuit Group plc (GEN:LN), a UK-based building products manufacturer. The firm reduced the target to GBP 5.05 from the previous GBP 5.15 while maintaining a Sector Perform rating on the stock.
The revision reflects updates to RBC Capital's financial model following Genuit Group's recent trading update. The firm has decreased its 2024 adjusted EBIT (earnings before interest and taxes) forecast to £91.3 million, a 1.8% year-over-year decline from the earlier projection of £92.9 million. The anticipated adjusted EBIT for 2025 has also been lowered to £93.8 million from the former estimate of £101.7 million, marking a 7.7% year-over-year decrease.
The reduced 2025 earnings forecast incorporates an estimated £5 million in additional costs due to increased National Insurance contributions and minimum wage expenses stemming from the 2024 UK Budget. RBC Capital also expects a further delay in the recovery of Genuit's underlying markets, now projecting a rebound more likely towards the end of 2025 or into 2026.
Despite these adjustments, the UK government's commitment to increased housebuilding and the decarbonization of the built environment provides a positive outlook for the sector. RBC Capital expressed confidence in Genuit Group's strong positioning to capitalize on these structural drivers as they evolve. The firm's analysis indicates that while near-term challenges persist, the company's long-term prospects remain supported by government policies.
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