DAVY VIEW

Ibstock’s interim results unsurprisingly highlight the impact that persistently weak demand is having on an inherently high fixed cost operating model. This pattern will continue in H2, but we think attention should focus further ahead and the potentially sharp acceleration in Ibstock’s earnings and cash flows. There is the external impetus from a new government intent on increasing housing output, while the UK interest rate reduction cycle is finally underway. Added to this will be the benefits from Ibstock’s investment projects coming through. We recently upgraded the stock to ‘Outperform’ with a price target of 215p and noted that over time confidence in the delivery of our 2028 earnings scenario would merit a further appreciation towards 320p.