Shares in building products manufacturer Brickworks Limited (ASX: BKW) are nudging higher today and now trade less than 1% in the green at $24.58 apiece.
Investors are holding onto positive sentiment in Brickworks after the company released a property update yesterday, confirming it expects record earnings in 1H 2022 and has recently purchased an additional 121 acres of land.
Now leading brokers have weighed in and offered their speculation on the direction of the Brickworks share price in 2022. Is it a buy? Let's take a closer look.
Is Brickworks a buy right now?
According to the team at Ord Minnett, Brickworks could be a decent buy as it currently stands. In a recent note to clients, the firm was pleasantly surprised by the valuation increase in Brickworks' property assets.
Not only that, but Brickworks' expected $290–$310 million in first half property earnings in FY22 – a record for the company – is well above its own internal estimates of $130 million, the broker says.
It also notes that the outlook for this division remains strong amid heightened demand for residential and industrial property assets in Australia.
However, amidst its bullishness, Ord also cautions investors that Brickworks' stake in Washington H. Soul Pattinson Co. Ltd (ASX: SOL) could be a drag on its share price performance in the comping periods.
The firm highlights that whilst Brickworks' expanding property portfolio and strengthened earnings profile are net positives, it still doesn't offset the declining value of its Soul Pattinson stake.
The value of Brickworks' stake has fallen by approximately 20% since late September, in direct contrast to the company's own fundamental momentum.
As such, the broker recently trimmed its price target on the share price by around 5%. Nevertheless, Ord Minnett retains its buy rating on Brickworks, and values the company at $27.50 per share, implying an upside potential of around 12%.
Fellow broker Citi also recently advised that it values the building products manufacturer at $30, implying that a considerable amount of upside is yet to be priced in by the market.
Not all are as rosy on the outlook for Brickworks, however. Macquarie retained its neutral rating on the company's shares today even after revising its price target upwards by 1% to $26.40. In contrast to Citi, it reckons that the company's strong property portfolio looks to be well priced in by the market.
Meanwhile, Morgans also has Brickworks as a hold, slapping a $26.10 per share valuation on the company in an update yesterday.
Henceforth sentiment appears to be mixed amongst the list of brokers mentioned in this report, however, in the list of analysts provided by Bloomberg Intelligence, the consensus price target for Brickworks is $26.45.
Brickworks share price snapshot
In the previous 12 months, the Brickworks share price has gained around 29% after climbing 28% this year to date.
It has gained more than 5% in the last month of trading and is up around 6% in the last week.
Each of these returns has outpaced the benchmark S&P/ASX 200 Index (ASX: XJO)'s return of around 10.5% in the last year.
