Analyst Note| Matthew Donen |
Narrow-moat Heidelberg Materials reported organic revenue growth of 13% during the first quarter, outperforming its Europe-listed construction materials peers. We attribute its outperformance to the group's larger weighting toward heavy building materials where price increases were pronounced. While the first quarter tends to be the least material during the year, management has raised the low end of its full-year EBIT guidance from EUR 2.35 billion to EUR 2.5 billion, resulting in a midpoint upgrade of 3%. Construction demand from infrastructure and commercial end markets remains robust, which supports CRH remaining our preferred pick in the sector given it is well positioned for an increase in infrastructure and commercial construction spending in the United States. We maintain our EUR 71 fair value estimate for Heidelberg Materials and view shares as fairly valued.