Ibstock slumps after Deutsche Bank downgrade

Brickmaker Ibstock was under the cosh on Monday after Deutsche Bank downgraded its stance on the shares to ‘hold’ form ‘buy’ and cut the price target to 168p from 183p.

The bank said it was reducing its 2020 and 2021 pre-tax profit forecasts, target price and rating following the recent trading update.

"Although the shares do not look expensive (2021E EV/EBITDA 8.2x), we believe they are up with events," it said.

Deutsche Bank added that it continues to expect the group to reintroduce dividends from the 2021 interim stage, using 2.1x cover.

In an update last week, Ibstock forecast annual core earnings of £50m after reporting better-than-expected third-quarter trade as demand continued to improve after the Covid-19 lockdown.

The company said revenue in the three months to September 30 was at 88% of 2019 levels. Clay and concrete volumes had recovered to around 90% of prior-year levels in September and remained at these levels during the month of October.

At 1055 GMT, the shares were down 5.6% at 151.60p.