On Thursday, RBC Capital initiated coverage on Forterra (NASDAQ:) Plc (FORT:LN) (OTC: FTTRF), a leading British clay brick manufacturer, with an Outperform rating and a GBP2.10 price target. The new rating reflects an optimistic view of the company’s potential for recovery and growth despite recent challenges.

Recognized as the second largest producer of clay bricks in the UK, Forterra primarily serves volume homebuilders. The company underwent a management shakeup in 2023 when a new CEO took over amid a cyclical downturn and increased leverage.

The company now aims to return profits to 2022 levels while reaping the benefits of nearly completed £135m capital expenditure aimed at growth.

RBC Capital’s analysis suggests that Forterra’s strategic efforts could lead to significant returns, with base and upside scenarios predicting returns of around 30% and 70%, respectively. This is based on an expected adjusted earnings per share (EPS) compound annual growth rate (CAGR) of 41% from the estimated 2024 to 2028.

The Outperform rating indicates confidence in Forterra’s ability to outperform overall stock market expectations. The GBP2.10 price target reflects the company’s belief in the potential value of Forterra’s shares, which is supported by the company’s investment in expansion and the expected positive impact on earnings.

This optimistic stance from RBC Capital comes as Forterra navigates the aftermath of a challenging period, with the goal of delivering robust financial performance in the years ahead. The company’s focus on returning to its prior earnings levels and driving incremental returns post-investment is central to this outlook.

This article was generated with the support of AI and reviewed by an editor. For more information, please see our T&Cs.