Higher input commodity costs remain a key headwind for James Hardie Industries' (ASX:JHX) earnings before interest and taxes margin (EBIT) guidance of "at least" 29.3%, Jarden Research said in a Tuesday note.
In November, the company said net sales for the three months ended Sept. 30 fell 4% to $960.8 million from $998.8 million a year earlier, due to higher pulp and cement costs.
The company also reaffirmed its fiscal 2025 EBIT margin forecast to be at the lower end of its previous guidance of 29% to 31%.
While Jarden Research notes that the margin guidance is "still highly commendable," it expects higher input commodity costs to remain a key headwind. Pulp indices have slightly eased, but the investment firm expects the third quarter pulp fiber costs to remain elevated.
Jarden also expects higher cement, labor, and freight prices.
The investment firm maintained its overweight rating on James Hardie Industries and raised its target price to AU$56 from AU$54.
James Hardie Industries' shares rose nearly 2% in recent Wednesday trade.
Price (AUD): $54.56, Change: $+0.87, Percent Change: +1.62%
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