CRH's NYSE Listing Shift Aims To Boost US Investor Appeal, Analyst Sees Potential Growth

Truist Securities analyst Keith Hughes initiated coverage on the shares of CRH PLC CRH with a Buy rating and a price target of $81.

CRH's shift of its primary stock listing to the NYSE is intended to capture U.S. investors given roughly 75% of its EBITDA is in the U.S., notes the analyst.

According to the analyst, the SOTP fair value of $81 per share shows upside potential to the current valuation.

Roughly 30% of the revenue in U.S. materials is aggregate and cement, while the remainder is downstream businesses, including road construction. The latter gets a much lower valuation given its lower margins, thus limiting the value of the segment, opines the analyst.

While Materials is the largest segment for CRH with 45% of 2023E revenue and 50% of EBITDA, the company has many other businesses, writes the analyst.

Americas Building Solutions (Building Products) represents 20% of 2023E revenue and 24% of EBITDA, and should see recovery with housing and remodeling on above average margins, according to the analyst.

The $81 price target represents a 9.3x weighted average EV/EBITDA multiple applied to the analyst's 2024 EBITDA estimate of $7.026 billion.

The analyst says CRH has seen its EBITDA margin grow from 8.2% in 2013 to the estimate of roughly 17.5% in 2023, with the growth driven by a 12% CAGR in EBITDA over this period.

In addition to the listing change, portfolio mix is also shifting towards the U.S., but the analyst believes there is still work to be done before these moves add multiple.

Price Action: CRH shares are trading higher by 2.48% at $67.69 on the last check Thursday.

Photo Via Company