The James Hardie Industries PLC (ASX: JHX) share price is trading in the red at lunchtime on Thursday. At the time of writing, the share price is 0.445% lower and changing hands for $34.12 a piece.
It's been a tricky few months for the fibre cement product producer after its share price crashed 36.24% over the third week in August. It has managed to recoup some of its losses over the past couple of weeks; however, over the year, the share price remains 36.56% lower.
Now, in a new note to investors, Macquarie Group Ltd (ASX: MQG) has revealed what it expects for the stock from here.
What next for James Hardie shares?
The broker has confirmed its outperform rating and $37.20 target price on James Hardie shares. At the current price of $34.12, that represents a potential upside of 9.02% for investors over the next 12 months.
The broker last raised its recommendation and target price on the shares in July.
"We prefer JHX and RWC for US building materials exposure," the broker said in its note.
"JHX (OP): Market conditions are tough, but slowly improving as channel destocking runs its course. Outcomes of the 29 October AGM will be keenly assessed. An evolving AZEK integration story, a slow bottoming of markets, and valuation are in support of a reassessment."
New data shows challenges continue but optimism rising
Macquarie surveys contractors from around the US who serve residential and non-residential customers across numerous end-markets. The survey gives a broad overview of market conditions, which then helps the broker determine accurate company and product pricing levels.
The findings from the latest survey show that confidence has improved by 4 points to 53 out of 100 points month on month to September.
"Lower mortgage rates helped offset otherwise heightened consumer uncertainty, which continue to hamper home buying and renovation intent. Impacts from job cancellations and deferrals increased. Construction bidding activity and backlogs improved significantly with both indices nearly at neutral levels (at 49/100pts). Product cost trends were a headwind, likely inflationary impacts from tariffs, while labour cost increased too," Macquarie said.
Meanwhile, product costs were broadly supportive, although construction labour cost trends worsened in the survey. Construction job openings were down +38% year on year in August, the lowest reading since June 2017. Heightened consumer sentiment and affordability challenges continue to be a headwind for the construction materials industry.
Elsewhere, the broker notes that mortgage rates are better.
"Mortgage rates have been range-bound so far in October (currently ~6.30%), with a smaller mortgage rate spread to the treasury yield. Rate cuts should aid stabilisation; Macquarie Macro Strategy team expect the Fed to ease ~50bps (with cuts in Oct and in 1QCY26)," the broker said.
