• Mark Watson-Mitchell

Forterra (LON:FORT) – ready to brick it again

Is now the time to have another run up with the shares of this UK brick maker?


The group recently published a Trading Update for the first four months of this current year to end October.


Trading in September and October was well ahead of management expectations and that continued into this month too.


It appears that the group has seen no let-up in the demand for its products with housebuilders encouraged to continue both the building and selling of homes, and builders' merchants remaining open to support tradesmen who are permitted to work on customers' properties.


Production at the group’s facilities is now running at pre-pandemic levels.


These pieces of bullish news are topped off by the company now upping market EBITDA expectations from £30m to at least £34m.


Estimates now suggest that revenue for the year to end December will be down £100m at £280m, while pre-tax profits will have been slashed some 80% to just £13m, worth 5p per share in earnings. Not unexpected estimates in the light of the massive Covid-19 hassles that persisted for the group.


Jumping forward to next year, suggestions are that sales will rise to about £315m, with pre-tax profits almost trebling to £36m, worth about 14p per share in earnings.


Brokers Peel Hunt rate the shares as a ‘buy’, Jefferies say ‘hold’, while Deutsche Bank have raised their ‘buy’ objective from 234p to 259p after the update.


We had a very good run after I profiled the shares last year, hitting my price aim.


Since then they have reacted to the virus and bottomed out at 144p before edging back up to the current 233p.


I have a gut feeling that we could well be in for another upwards price run for this £540m capitalised group.



(Profile 30.05.19 @ 286p set a Target Price of 350p*)