Fletcher Building gets upgrade from ABN AMRO

Financial markets analyst ABN AMRO has upgraded its earnings forecast for Fletcher Building under new accounting rules.

ABN AMRO's increased its forecast for net profit after tax by 5 per cent to $368 million in the June 2006 year, and by 7 per cent to $365 million for 2007, when Fletcher Building adopts new IFRS accounting rules. The increase is largely because the company will not have to amortise goodwill.

Fletcher Building told analysts last week that the outlook for the construction sector was unchanged, with residential building expected to weaken, but non-residential and infrastructure divisions to support earnings.

"The fundamentals for the company remain in excellent shape. The key upside risk to our target price relates to potential value-adding external growth options," ABN AMRO analyst Dennis Lee said.

A rise in share price, which hit a record high of $8.42 on Wednesday, has resulted in a reduced recommendation to "hold" from "add". ABN AMRO has a target price of $8.19.

Fletcher Building fell 25c yesterday and lost another 15c to 800 today.

- REUTERS