General | Feb 05 2006
The analysts at Credit Suisse are “concerned” about New Zealand’s Fletcher Building’s (FBU.NZ) discount to its Australian peers as well as highlighting potential corporate activity over the longer term, given what they see as the company’s potential vulnerability due to its “large balance sheet capacity relative to the free cash flow it generates.”
Despite the recent share price appreciation, the analysts calculate the stock is trading at a 19% discount to its peers on FY06 projections and 17% on FY07.
Although Australian housing activity continues to be soft, the analysts say, activity appears to be “levelling out.”
As a result of these factors, the analysts have upped their recommendation to Outperform from Neutral and their target to NZ$9.83.
