Why the Boral Ltd [ASX:BLD] Popped Higher Today…

What happened to the Boral share price?

Shares of listed building company, Boral Ltd [ASX:BLD] gained more than 2.1% today, as broking and research firm, JP Morgan raised its rating on the company’s stock, with a price target of $6.50.

Why did BLD shares rise?

Boral Ltd is a manufacturer and supplier of building products. Australia accounts for around three-quarters of the company’s revenue, with the United States accounting for most of the remaining quarter.

But while Australia’s housing market has boomed over the past 10 years, the same can’t be said for Boral’s revenues, which have remained relatively flat.

And even profitability levels aren’t much to shout about, either.

In a way, you can see that reflected in the share price, which at $6.05, is still below the 2006 peak of $9.04. But shorter term, since the market low of 2009, the lack of revenue and profit growth hasn’t held back the share price.

The stock has almost tripled since the 2009 low of $2.15. The company’s well-known brand, and ability to continue paying a dividend, even while revenue and profits have been volatile, is no doubt one reason for the relatively strong share price performance.

Should you buy Boral shares at this price?

The stock has bounced higher today, following the JP Morgan upgrade. However, it’s still a fair way short of JP Morgan’s $6.50 price target.

If the JP Morgan analysis is right, the stock price could still have further to go, with the potential not yet factored into the price by the market. One to watch.

By Kris Sayce


Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms. A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Markets and Money e-newsletter in 2005. He is the Publisher, Investment Director and Editor in Chief of Australia's most outspoken financial news service, Markets & Money.

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