Amrize Downgraded by BofA on Muted Growth Outlook and Valuation Concerns

Bank of America on Wednesday downgraded Amrize to Underperform from a Neutral rating and cut its price target on the company's stock to $40 from $50. The brokerage cited a combination of slower earnings growth, emerging risks in key markets, and a valuation it now considers too high.

The Analyst's Rationale

In its note to clients, BofA outlined a more cautious outlook for Amrize, lowering its 2027-28 adjusted EBITDA estimates by approximately 3%. This revision places the bank's forecast about 7% below the consensus expectations. Similarly, its adjusted earnings-per-share (EPS) estimates for the same period are now roughly 10% below consensus.

BofA projects a subdued growth profile for the company, forecasting annual adjusted EBITDA growth of about 3% and adjusted EPS growth of about 6% between 2026 and 2028, excluding any large-scale acquisitions. The bank also pointed to a series of operational, reporting, and management changes since the company's 2025 spin-off that it believes could weigh on investor confidence.

Key Market Headwinds

BofA identified several specific challenges facing Amrize's core business segments:

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• U.S. Cement: The bank expects U.S. cement prices to remain largely stable in 2027, as weak housing demand, elevated mortgage rates, and persistent import pressure limit pricing power. It anticipates stable cement volumes in 2027, followed by modest 2% annual growth from 2028.
• Canadian Operations: Canada, which accounts for about 23% of group sales, faces pressure from 50% U.S. tariffs on several products, including cement. BofA warns this could dampen domestic Canadian demand and increase logistics costs.
• Roofing Margins: The building-envelope division is seen as vulnerable, particularly residential roofing. The bank noted that a relatively quiet hurricane season could weaken demand in late 2026 and early 2027, potentially limiting margin recovery.

Valuation and Financial Outlook

BofA's new $40 price target is derived from a sum-of-the-parts valuation based on 2027 estimates, applying lower multiples to reflect the identified risks. For 2026, the bank forecasts revenue of $12.59 billion, adjusted EBITDA of $3.16 billion, and adjusted EPS of $2.65.

While acknowledging Amrize's strong balance sheet—with net debt-to-EBITDA expected at a relatively low 1.2 times by year-end 2026—the bank cautioned that large acquisitions are not guaranteed positive catalysts. BofA suggested that accelerating share buybacks could be a more effective use of capital than pursuing expensive deals.