Texas Industries Downgraded To Hold By Jefferies Int'l

Jefferies International has published a research report on Texas Industries TXI and has downgraded the company from Buy to Hold. In the report, Jefferies writes "In addition to amending our forecasts for the better than expected Q2 results, we have made two further changes. First, our new estimates assume higher selling prices for both cement and aggregates than previously, but to broadly flat in Q3 and Q4 of this year compared with Q2. Second, we have increased our estimate of production costs in Q3, following management guidance on the post-results conference call. In last year's Q3 there was a large increase in cement unit production costs per ton to $101.70 from $73.92 in the same quarter of the previous year. This was due to a higher concentration in the quarter of the year's maintenance costs and $8m of additional fixed costs as production was reduced to lower inventory. As management stated that it expected these costs to recur this year, we have increased our previous estimates of cement production costs in this year's Q3 from $90 per ton to $100 per ton. This also negatively impacts our forecasts for FY2012 as we are also assuming additional costs then." Jefferies maintains its $43 price target on Texas Industries, which closed Friday at $42.15.