James Hardie Industries PLC (ASX: JHX) shares are in the spotlight as the building products company prepares to release its FY25 results later this week.
Shares have been heavily sold so far in 2025, with the stock down nearly 24% this year, despite catching a bid in the past month of trade.
They now fetch $38.09 apiece, a far cry from the $50 per share market value observed in early January, when trading resumed for the new year.
Investors are no doubt keen to know whether James Hardie shares are a buy, hold, or sell heading into its upcoming earnings. So here's Macquarie's take on the situation. Let's dive in.
Macquarie still neutral on James Hardie shares
In a note to clients this week, Macquarie kept a hold rating on James Hardie shares, valuing the business at $40.20 per share.
This is about 5-6% upside potential at the time of writing, and is unchanged from the broker's previous rating.
Macquarie is fairly positive on James Hardie shares when looking out to FY26. It projects net profit of US$697 million, slightly ahead of the consensus of analyst estimates of $693 million.
But in the near term, the broker is less so. It says business conditions are "worsening" for the company, mainly in its repair and remodel (R&R) division. This will likely cause a "softening top line" for the business.
Market conditions are worsening, particularly in the R&R market, as borne out by our recent contractor survey readings. Uncertainties have materially increased over the last six weeks.
So, we would expect more cautious commentary on market conditions than those contained in the group's recent 4F filing – which included forecasts that pre- dated the deal announcement on 24 March.
Macquarie also noted its "optimism index", which measures activity in the R&R market, "fell markedly in April to its lowest levels on record".
James Hardie is also undergoing a major restructuring effort. It is targeting US$100 million in manufacturing cost reductions. According to Macquarie's note, the company was around a third of the way through.
This is a positive for James Hardie shares, per the broker.
That said, it has not included the proposed acquisition of outdoor living company AZEK and the corresponding increase in debt this would bring in its forecasts.
And even with more efficiencies, the broker can't overlook the tighter market conditions, including high mortgage rates over in the US.
"This should weigh on outlook commentary, even if it is offset by strong efficiency progress", it said, reiterating the hold call on James Hardie shares.
I would also note that Bell Potter has a buy rating on the company with a $63 price target.
Foolish Takeaway
Top broker Macquarie has just posted its updated rating and analysis on James Hardie shares leading into earnings this week.
Analysts are wary of the broader issues at hand, including the macroeconomic backdrop and a weaker market for the company to sell into.
The stock is down 30% in the past year.
