Rockwool International A/S rose to its highest price in five years in Copenhagen trading as Sydbank A/S said investors should buy the stock because the world’s largest maker of stone-wool insulation will raise its forecast.
Rockwool rose as much as 1.7 percent to 955 kroner, the highest since May 20, 2008. The stock added 1.6 percent to 954.50 kroner at 9:59 a.m. in the Danish capital with trading volume at 38 percent of the three-month daily average. The shares have gained in 12 of the last 15 trading sessions.
Rockwool will next week report improving second-quarter sales and profits as the Hedehusene, Denmark-based company benefits from higher insulation prices and revenue from building projects that are set to resume after delays, Sydbank said. The bank, which repeated a buy recommendation on the stock, said Rockwool also enjoys lower input costs, including lower prices for coke, the fuel used to melt lava into stone-wool.
“The tough market conditions in some western European markets pressure volumes and will drag down profitability,” Soeren Loentoft Hansen, an analyst with Sydbank, said today in a note to clients. “However, this will be countered by continued good volume developments on key markets including the German, the French, the Russian and the American.”
Rockwool’s current 2013 outlook is for revenue to be “slightly above” last year’s level and net income to be about 700 million kroner ($125 million). Rockwool will increase this guidance, said Loentoft Hansen, without providing specific numbers.
Rockwool is due to publish second-quarter earnings on Aug. 27. The company will report net income of 219 million kroner, according to the average estimate in a Bloomberg survey of six analysts. That compares with a second-quarter profit of 179 million kroner in 2012.
Rockwool has beaten average analyst net income estimates in 12 of its past 15 earnings quarters, according to data compiled by Bloomberg.
Nordea Markets raised its share-price estimate on Rockwool today to 935 kroner from 810 kroner. Copenhagen-based analyst Patrik Setterberg repeated a hold recommendation on the stock, saying the valuation has become “too aggressive” as tough market conditions in Europe aren’t fully priced into the stock.