JPMorgan Upgrades Kingspan, Remains Selective on European Building Materials Sector

JPMorgan has upgraded insulation specialist Kingspan to Overweight from Neutral, citing strong earnings momentum, while urging investors to maintain a selective approach toward the broader European building materials sector. In a note to clients, the bank highlighted that the sector has de-rated approximately 10% year-to-date amid ongoing inflation and interest-rate uncertainty.

Kingspan Upgraded on Data Center Demand

The upgrade for Kingspan is driven by the company's significant exposure to the data center market and a forthcoming U.S. roofing venture. JPMorgan analysts, led by Elodie Rall, noted that order intake for Kingspan's Advnsys data center unit has "nearly quadrupled."

In conjunction with the rating change, the bank raised its price target on Kingspan to €130 from €95. The firm is expected to provide more details on its U.S. roofing business at a capital markets day scheduled for November 10 in Oklahoma.

A Cautious Sector Outlook

JPMorgan observed that a rotation into lighter-weight building product stocks ("Lightside") has outpaced heavier materials names ("Heavyside") since second-quarter earnings, but stated this trend "has largely played out." The bank now sees opportunities in both sub-sectors but remains cautious heading into the end of 2026.

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Despite the challenges, the bank maintained Overweight ratings on several companies, including Heidelberg and Saint-Gobain, flagging their valuations as attractive. Heidelberg trades at 7 times estimated 2027 EV/EBITDA with a 7% free cash flow yield, while Saint-Gobain's valuation was described as "very compelling" at roughly 6 times estimated 2027 EV/EBITDA.

Catalyst Watch Ahead of Q3 Results

JPMorgan placed several companies on its "Catalyst Watch" list ahead of upcoming third-quarter earnings reports:

• Holcim and Sika: Placed on Positive Catalyst Watch before their October 23 results, with JPMorgan seeing potential for earnings to beat consensus estimates.
• Amrize: Placed on Negative Catalyst Watch ahead of its results during the week of October 26, with analysts flagging risk to its 2026 growth targets "given a lack of storm activity so far" this year.