Wienerberger confirmed at BUY, TP EUR 19 - Initial assessment of Covid-19 impact - BUY retained

The Covid-19 pandemic has put an unexpected and hefty halt to Wienerbergers series of (earnings) growth years. Having reached our prior target price of EUR 28 in mid-February, the stock has plunged nearly 60% to its intra-year low and despite a certain recovery is still down ~45%. We think this sufficiently reflects the deteriorated outlook and thus see value in the shares. It goes without saying that the impact on residential housing demand cannot be reliably assessed at this stage, but we have cut forecasts sharply (FY 20 sales -14% and EBITDA -27% yoy, after a largely flat 1Q) and assume that even in FY 22e figures will be below the pre-crisis level. From our point of view, the re-opening of economies is crucial as rising unemployment rates and falling consumer confidence would be detrimental factors to building activity. The company also voiced the assumption that public housing programmes might be introduced in a post-crisis environment to support demand. While arguably not comparable to the 2008/09 financial crisis, we regard Wienerberger as much better equipped to weather the storm. We deem the balance sheet more robust, the company has made progress in streamlining its cost structure (Fast Forward) and has improved its product portfolio. Therefore we maintain the BUY rating with a new target price of EUR 19 (EUR 28).