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ING downgrades Holcim, Lafarge, Saint-Gobain
Mar, 10 2010
FRANKFURT (MarketWatch) -- Swiss cement firm Holcim Ltd.
(CH:HOLN
76.55,
-0.23,
-0.29%)
was downgraded to hold from buy at ING, which also cut its rating on France's Lafarge S.A.
(FR:LG
51.98,
-0.55,
-1.05%)
to sell from hold.
ING said Holcim should be the core holding in the
sector for the long-term investor, but after strong outperformance it
looks fairly valued given the lack of visibility in the near term. As
for Lafarge, ING thinks that it's the most highly geared stock in the
sector and it's very exposed to the risk of falling cement prices. "The
downside risks are substantial and not captured in premium multiples,"
the broker said. ING maintained its underweight rating on the building
materials sector.
"The market is pricing in trough earnings for 2010
and a recovery to peak margins next year," ING said. "We think this is
too optimistic given zero visibility and the potentially disastrous
impact on margins of negative operational gearing." Also, France's
Compagnie de Saint-Gobain SA
(FR:SGO
35.80,
-0.39,
-1.08%)
was downgraded to sell from hold at ING. With over 80% sales in
developed markets, the outlook for volumes is poor at Saint-Gobain and
the shares look overvalued, ING said.
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