Brickworks Ltd (ASX: BKW) shares have rallied over the past month or so.
The share price has risen 19.4% since it dipped to $23.08 in early April. As of lunchtime today, the stock is trading at a much healthier $27.32.
Over the year, the shares have increased 3.48%.
But while the latest numbers look optimistic, Macquarie Group Ltd (ASX: MQG) is reserved about the stock's potential.
What is Macquarie saying about Brickworks shares?
It appears that Macquarie doesn't expect Brickworks' latest gains to stick.
In a recent research report, Macquarie stated a neutral opinion on the stock, with a target price of $26.
That's a 4.83% decrease on the current share price of $27.32.
But the broker also notes that the price target comes with some risk.
"Key risks to our view focus on building activity impacts," Macquarie said in its report.
"Policy developments, interest rate movements and changes in the macro context could all influence outcomes".
Macquarie also pointed to property development schedules and the movement of the value of Brickworks' interest in Washington H Soul Pattinson & Co Ltd (ASX: SOL) as other factors that may influence stock performance.
Building activity headwinds continue
Brickworks is a well-known Australian-based manufacturer and distributor of building products. The company also has exposure to brick-making operations in the US. It manufactures several products such as clay bricks and pavers, masonry and stone, roofing, cement, and specialised building systems.
In its H1 FY25 report, Brickworks' overall underlying operating profit rose 472% to $148 million, and underlying net profit after tax grew 308% to $76 million.
But the result wasn't as strong as it appears on paper.
Though figures came straight off the back of a weak H2 FY24, skewing the numbers.
Also, its Australian building products' operating profit fell 4% to $50 million, and its North American building products division dropped 3% to $3 million.
Why?
Unfortunately, the business is currently facing headwinds from a combination of low demand and higher interest rates. While the company is working hard on cost control to remain profitable and continue productivity improvements, market conditions are working against it.
What are other analysts saying?
Elsewhere, other analysts are divided over Brickworks' shares and any potential price movement.
The average price target is $28.02 with a high forecast of $31.60 and a low forecast of $25.01.
The average price target represents a 2.56% increase from the current price of $27.32. The low forecast represents an 8.4% drop from today's value.
