A new report from Macquarie has identified ASX 200 stock Fletcher Building Limited (ASX: FBU) as a stock set to fall.
Fletcher Building is a dual-listed New Zealand building and materials company with operations in Australia.
Its share price has been volatile this year, and at the time of writing is up 2.7% over the last 12 months.
Today, it is trading for $2.86 on the ASX and $3.26 on the NZX.
However the team at Macquarie has an underperform rating on this ASX 200 stock – indicating there could be a share price fall in the near future.
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Heavy downside anticipated
It's important to note that Fletcher Building's primary reporting currency is NZD.
When issuing target prices, analysts usually use the company's base currency for consistency with its financial reporting, earnings, and valuation models.
The team at Macquarie have a 12-month target in NZD of $1.59.
At the time of writing, its share price on the New Zealand Stock Exchange is $3.26.
Based on this price target, the team at Macquarie anticipate a drop of 51.23%.
ASX 200 stock to suffer from building rate
Macquarie believes one of the main catalysts for this negative outlook is the New Zealand residential building rate.
The broker noted it is unsustainably high due to capacity constraints and weak population growth. Early October data points to a slowdown, prompting earnings adjustments by Macquarie.
We think the sustainable res. build-rate in NZ is ~27k pa vs current consenting rate of 34k (to Aug; build-rate based on CCC/ICP data at 32k). Low population growth (0.7% pa ex students) and continued low deposit affordability (eg greater people per household) are key factors here.
FY26-28E EPS -2%, -4% and -3% rep on lowerNZ margin base and lower medium term Res division sales.
Macquarie forecasts FBU's FY26 EBIT approximately 7% below the market average and 20% below for FY27.
This is due to unsustainably high residential building rate, weak population growth, low affordability, and record unsold housing.
The broker also believes the company faced a tough Q1 with low demand, pricing pressure, and weak speculative builder activity.
