FBU has underperformed due to a combination of faster deterioration in residential volumes and mix change impacting margins plus larger legacy costs. The stock was hammered after reporting 1H24 EBIT before significant items of $264m, which was 16% below expectations, although it has bounced strongly from its panic lows. There was plenty of frustration that management didn’t communicate weaker trading earlier – sounds familiar! We believe the current stock price is taking a very pessimistic view of the business moving forward, but we are conscious that it’s been a serial underperformer.
- We like FBU as a recovery play with the risk/reward that looks attractive ~$3.50-60, but it’s not on our Hitlist.
MM likes FBU as a recovery play
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