The Boral Ltd (ASX: BLD) share price has dropped into the red these last few weeks. At the time of writing, shares in the construction materials supplier are down around 2.8% since the start of November. They are now trading at $6.23 apiece.
For comparison, the benchmark S&P/ASX 200 index (ASX: XJO) has lost 1.27% over the same timeframe.
Let's take a look a what's been weighing the Boral share price down lately.
Sentiment is low right now
Analysts at several investment firms aren't too rosy on the outlook for the Boral share price. For instance JP Morgan thinks earnings for Boral's local construction materials business are at "trough" levels.
It also questioned if management can deliver on its $200 million – $250 million transformation programme in Australia. The firm also notes Boral's language on an approximate $16 million hit from enforced lockdowns in July.
JP Morgan is also uncertain if Boral can recover lost volumes from these enforced lockdowns, given this is expected to have a drag of around $50 million in Q1.
Fellow investment bank UBS believes Boral might face challenges regaining its core margins until there is a rebound in the NSW housing market.
UBS also notes Boral has made several divestments of late, saying growth of its underlying business might suffer as a result of the slimmer operations.
Jefferies feels the same way and reckons Boral needs to do a double-check on its debt portfolio. The firm notes Boral has US$1.25 billion in debt across 8 US senior notes, with expiries ranging from November 2022 to November 2030.
Don't forget Boral has to pay the 3% to 4.58% coupon (interest) on these bonds on each date over the next 8 years when the payments fall due.
Linking to what UBS said, Jefferies notes there will likely be no hedge against this debt, given Boral will likely make the full exit from North America.
None of this suggests good news for the Boral share price. However, the broad sector is behind as well. Just as Boral has copped it, it's also been a bumpy ride these past 3 months for the S&P/ASX 200 Materials Index (ASX: XMJ).
The index has fallen by 14% since mid-August, although it has been recovering somewhat in recent weeks. Nonetheless, this performance indicates that investors aren't exactly diving into the sector either.
Boral share price snapshot
Despite the headwinds this past month, over the past year Boral shares have returned around 22%. The Boral share price has also gained 26% this year to date.
This is ahead of the benchmark index's return of around 10% in the last 12 months.
