Right now, investors may be sorting through the murky waters of President Trump's tariffs looking for companies that are more resilient to global economic uncertainty.
According to a report from Macquarie, one such company that could fit the bill is Reece Ltd (ASX: REH).
Reece Ltd (ASX: REH) engages in supplying plumbing, bathroom, heating, ventilation, air-conditioning, waterworks and refrigeration products to customers in the trade, retail and commercial markets.
The company operates in Australia and New Zealand, and the United States.
The company has had a tough start to 2025, dropping 32.51% in that span and 42.58% over the last year.
Part of this could be due to the disappointing FY25 results.
The company reported a 3% drop in revenue to $4.4 billion and a 19% decline in net profit.
Reece attributed this to the the softer housing construction market in both Australia and the US.
Macquarie's outlook
Despite such a rocky 12 months, Macquarie believes the company is:
Well positioned to offset nearly all tariff impacts with price, but a softer US market backdrop is likely to weigh on volumes.
The broker highlights that Reece Ltd sources much of its products from local US suppliers, however those suppliers are likely sourcing a range of SKUs (and sub-componentry) from China.
Reece is in a strong position to pass on the tariff impact nearly entirely given its industry-wide nature.
Risks preventing further upside
Despite the belief Reece can offset nearly all impacts of Trump's tariffs, the broker remains "neutral" on the share price.
At the time of writing, Reece Ltd shares are trading at $15.24 apiece.
Macquarie has an updated price target of $16.40. This insinuates a modest 7.61% upside.
This capped trajectory is attributed to:
- Competitive intensity in the US waterworks market presents a new, and uncertain risk to the growth trajectory in the near to medium term.
- Near-term volatility with rapid shifts in US trade policy and uncertain impacts on consumer confidence and behaviour.
- While interest rate support has emerged in Australia, the US remains challenged by sticky interest rates. The impact on market conditions remains uncertain.
Looking elsewhere, other brokers see more upside in Reece Ltd.
Bell Potter seems to think there is slightly more upside, with a target price of $17.85 (upside of 17.13%).
Online brokerage platform SelfWealth has an average target price of $19.08 (upside of 25.20%).
