UBS has turned more cautious on Ibstock PLC (LSE:IBST), cutting its rating from 'buy' to 'neutral' and slashing its price target from 210p to 140p, only 3% above Wednesday’s close at 136p.
The broker said the short-term outlook for the brickmaker looked weak, even if longer-term fundamentals remain intact.
The change of tone follows Ibstock’s recent profit warning and reflects a softer view of the UK housing market.
Analyst Julian Radlinger said “the backdrop is less compelling for now”, with new-build planning reforms taking longer to feed through, a subdued macro environment and possible caution ahead of the Budget.
UBS has trimmed its 2026 earnings forecast, expecting EBITDA of £80 million versus consensus of £87 million.
While near-term demand is under pressure, UBS still sees medium-term promise.
Volumes are down more than 30% this year compared with 2019, but as the housing market recovers, Ibstock’s unused capacity should deliver strong operational leverage. The broker expects EBITDA to climb from £70 million in 2025 to about £140 million by 2030, back to 2022 levels.
After roughly £210 million of investment between 2022 and 2025, capital spending should fall back to about £20 million a year.
That would support free cash flow of around £220 million over 2026 to 2029, or more than 40% of the current market value, giving room to cut debt and perhaps fund buy-backs or acquisitions.
UBS based its lower target on reduced earnings forecasts and a higher discount rate. The valuation now reflects a tougher near-term backdrop, even if the longer-term recovery story is still in place.