James Hardie Industries PLC (ASX: JHX) shares are trading lower again on Monday.
At the time of writing, the building products company's shares are down slightly to $30.11.
This leaves them trading within a whisker of a 52-week low of $28.11.
While this is disappointing for shareholders, the team at Macquarie Group Ltd (ASX: MQG) thinks it could have opened up a buying opportunity for the rest of us.
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James Hardie shares tipped to rise
According to a note out of Macquarie, it has been busy looking at the construction materials industry.
Unfortunately, optimism is falling across US contractors. It said:
Our confidence index eased again in August on heightened consumer uncertainty and elevated mortgage rates, which continue to hamper home buying and renovation intent. Job deferrals increased, though job cancellations remain low. Construction bidding activity and backlogs improved marginally, yet both indices remain in contraction (<50pts). Product cost trends were stable, while labour cost pressures increased a touch.
One positive, though, is that mortgage rates have fallen to their lowest level in the past 12 months. And while this could be supportive of the industry, consumer sentiment and affordability challenges are likely to continue to weigh on the industry. It adds:
Mortgage rates fell to their lowest level since October 2024 (currently ~6.35%), with a stable mortgage rate spread to the treasury yield. Product costs were broadly supportive, though construction labour cost trends worsened in market data (and in our survey). Construction job openings rebounded +34% YoY in July, albeit from a low base. Heightened consumer sentiment and affordability challenges remain a headwind to industry volumes. Rate cuts should aid stabilisation; Macquarie Macro Strategy team expect the Fed to ease ~75bps (with cuts in Sep, Oct and in 2QCY26).
Nevertheless, Macquarie feels that this is baked into James Hardie's shares and is thinks investors should buy them while they are down. It adds:
While JHX's balance sheet represents a material risk, we remain constructive on the investment thesis. The stock has corrected materially, and the earnings base is well below mid-cycle. Monetary policy support could prove a key catalyst, while alignment should improve from here.
The note reveals that Macquarie has retained its outperform rating and $37.20 price target on its shares.
Based on its current share price of $30.11, this implies potential upside of almost 24% for investors over the next 12 months.
Summarising its views, Macquarie concludes:
Optimism Index declined 5pts to 49. Elevated mortgage rates and consumer confidence still impacting confidence. We prefer JHX and RWC for US building materials exposure.
