Heidelberg Gains as JPMorgan Cites U.S. Market Presence

HeidelbergCement AG (HEI), the world’s third-largest maker of cement, rose the most in more than two months after JPMorgan Chase & Co. (JPM) said the company’s presence in Europe and the U.S. may protect it from emerging-market “headwinds.”

HeidelbergCement increased as much as 4 percent to 55.43 euros, the steepest intraday gain since May 7, and was trading up 2 percent at 4:30 p.m. in Frankfurt, valuing the company at 10.2 billion euros ($13.5 billion). Trading volume exceeded the three-month daily average by 23 percent.

The cement producer, which is based in Heidelberg, Germany, generated more than half of revenue in 2012 from Western economies, with 30 percent from northwestern Europe and 25 percent from North America. The World Bank cut its global economic-growth forecast for 2013 last month after emerging markets from China to Brazil slowed more than projected.

“Heidelberg is our preferred play in the cement sector,” as competitors Holcim Ltd. and Paris-based Lafarge SA (LG) are “largely exposed to emerging markets,” Elodie Rall, Emily Biddulph and Rajesh Patki, London-based analysts at JPMorgan, wrote in a research report published late yesterday. HeidelbergCement is “rightly positioned through its U.S. exposure and western Europe to deliver” on estimates.

JPMorgan raised its recommendation on HeidelbergCement to overweight from neutral and estimate the stock will reach 57.30 euros. The bank rates Holcim and Lafarge as neutral, saying more-optimistic industry analysts are “relying too much on cost-saving deliveries to offset the current headwinds from weakening emerging markets” that confront the companies.

Heidelberg’s stock has gained 19 percent this year, beating gains of 0.7 percent at Lafarge and 3 percent at Jona, Switzerland-based Holcim.

To contact the reporter on this story: Weixin Zha in Frankfurt at wzha2@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net

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