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Is the Brambles BXB selloff overdone?

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    Is the Brambles BXB selloff overdone?

    Hi team. Thanks for continuing high value comments and clear communication. Brambles came out with Qtrly report which failed to inspire the Mkt mainly due Forecasts. So they’re getting higher prices, better value but customers while doing inventory minimising are reducing there pallet stocking needs. Do you think this is an overreaction by the Mkt as inventories will rise again and volume growth for BXB will follow? It seems that forecasts are being made even more important these days (rather than results). Thx Glenn

    Answer

    Hi Glenn,

    You are 100% correct on forecasts  having greater influence these days than actual results, look at Meta Platforms (META US) this week!

    This week s result  hasn’t changed our investment view on BXB. We expect growing confidence in Brambles’ free cash flow recovery will ultimately drive re-rating of the multiple. We wrote about BXB in March here when we said “we liked the business but it felt fully valued around $16”, not its closer to $14 we like the risk/reward. However, the bulls may have to wait until
    August when they release their FY24 FCF plus guidance into FY25 before the stock is likely to recover significantly.

    We believe the BXB is an overreaction which is presenting a great opportunity for fans of the business.

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    Brambles Ltd (BXB)
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