The James Hardie Industries plc (ASX: JHX) share price has crashed 6% in early morning trade on Wednesday.
At the time of writing, the shares are changing hands at $37 a piece.
Despite the tumble, the shares are still up around 20% year to date and 24% higher than a year ago.
The decline comes off the back of the company's Investor Day presentation, which was posted to the ASX ahead of the market open this morning.
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What did James Hardie announce?
The cement manufacturer said it is seeing consistent demand for its products and is executing well in the areas it can control.
As a result, management is able to reaffirm the company's second quarter and FY27 sales and adjusted EBITDA guidance (excluding Europe), and raise its FY27 free cash flow guidance to more than US$600 million, up from US$500 million+ previously. This is despite a continued challenging macro backdrop.
The company also revealed that it is targeting annual organic growth of 4% to 7% above market, with compounding earnings.
Elsewhere, James Hardie said that it is accelerating the integration with AZEK, achieving faster-than-expected cost synergy targets. It now expects to complete the US$125 million cost synergy target a full year ahead of schedule, while revenue synergies are progressing as planned.
James Hardie is also pressing ahead with the divestment of its European operations for about US$980 million. The proceeds of which are already earmarked to pay down debt and fund share buybacks.
The announcement looks good on paper, so why are investors selling up?
What is spooking investors today?
The James Hardie share price had rallied strongly through June to August, reaching a 52-week high of $44.12 early last month. So it's likely that investor expectations were already incredibly high.
Investors may also have been disappointed that management reaffirmed its FY27 sales and adjusted EBITDA guidance rather than increasing it.
It's also possible that there is still some uncertainty about how quickly cost and revenue synergies from the AZEK acquisition can translate into earnings and cash flow.
What's ahead for the James Hardie share price?
I expect we might see analysts and brokers revise or reaffirm their outlook for James Hardie shares in the coming days, following this morning's announcement.
But at the time of writing, sentiment looks mostly very positive.
Market Index data shows brokers are currently split between a buy and hold rating. But the $39.20 average target price implies around a 5% upside, at the time of writing.
Analysts on TradingView are much more bullish. Of 25 analysts, 19 have a buy/strong buy rating, and another 6 rate the stock as a hold.
But they all agree there will be some element of upside ahead. At the time of writing, the average $47.59 target price implies a potential 28% upside ahead. Whereas some are even more confident and forecast the shares to climb 50% higher to $56.05 each.
