Why Reece (ASX: REH) has popped ~8%
Why are Reece Group (ASX: REH) shares up 8% today?
The Australian plumbing and bathroom supplies giant has surged following a stronger-than-expected 1Q27 trading update, reversing weakness earlier in the week following a broker downgrade.
- Reece reported September quarter sales of $2.51bn, up 4.3% year-on-year, or 8.7% in constant currency.
- Its Australian and New Zealand operations were the standout, with sales jumping 12.8%, supported by stronger volumes and higher prices.
Importantly, Reece’s US business also performed better than feared, with sales increasing 5.6% and comparable sales rising 2.4%, despite challenging conditions in the US housing market. Management expects ANZ trading momentum to remain strong through the first half of FY27, although uncertainty persists around the US recovery and the second half.
The sharp rebound is particularly notable following Citi’s downgrade of Reece shares to Sell earlier this week, with a $16.10 price target. Investors had become increasingly concerned about the impact of weak US housing activity on Reece’s earnings, but the latest trading update suggests the business is holding up better than expected.
Shares have rallied this morning towards their 52-week high of $17.63. We liked this 1Q27 result, particularly the strength of its Australian operations and resilience in the US. However, further upside will increasingly depend on a sustained recovery in US housing activity and earnings growth, rather than continued strength in ANZ alone.
MM remains long and bullish towards Reece (REH)
