Will the ‘gains continue to unwind’ for the Boral share price?

Tougher times on the horizon for Boral shares, analysts say

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Key points

  • Boral shares are trending heavily down in 2022
  • Analysts have noted impending risks for the company in a string of recent updates
  • In the last 12 months, the Boral share price has sunk more than 57% into the red

It’s been a tough 2022 so far for Boral Ltd (ASX: BLD) with shares in the building supplies company down more than 51% in the red this year-to-date.

The Boral share price sank to 52-week lows in February post-dividend when the company returned $3 billion in capital to shareholders. It hasn’t recovered since.

At the time of writing, the Boral share price is down 1.18%, trading at $2.925.

Sentiment appears to be shifting

Analyst sentiment appears to be shifting for Boral, with a string of research notes highlighting impending risks for the company in May.

UBS analyst Lee Power noted last month that Boral had realised a $47 million benefit to costs on diesel from FY19 to FY21. However, he added:

With no hedging for diesel post-April 2022, we think the gains over the past few years will continue to unwind.

We see diesel as more significant than coal and note diesel (net of fuel rebates) represents $59 million of the $130 million in energy and fuel costs in FY21 (versus coal at $14 million).

Another macro-themed report from UBS by Richard Schellbach also said that Boral was one of 19 stocks that might be facing headwinds due to rising input costs.

Meanwhile, analysts at Morgan Stanley reckon the market has already priced in any prospect of improved FY23 earnings.

The broker cut its rating on Boral from equal weight to underweight in a recent note, even though they reckon the company will boost pre-tax earnings.

It now values Boral at $2.80 per share, a shade ahead of bear Credit Suisse at a $2.60 price target.

Following sell ratings from Credit Suisse and Morgan Stanley in May, calls are now evenly split between buys, holds and sells at one-third each, per Bloomberg data.

About the Boral share price

The consensus price target for Boral is $3.35 per share from this list, implying around 13% upside potential at the time of writing.

In the last 12 months, the Boral share price has sunk more than 57% into the red and trades on a book value per share of $3.81 on last check.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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