UBS Downgrades Buzzi to 'Sell' on U.S. Import Pressure, EU Carbon Costs

UBS has downgraded Italian cement manufacturer Buzzi to “Sell” from “Neutral” and significantly cut its price target, citing a deteriorating outlook in the company's key U.S. market and mounting environmental costs in Europe. The brokerage lowered its price target on the stock to €34 from €52, prompting it to reduce its 2027-2030 earnings-per-share estimates for Buzzi by 10%-25%.

U.S. Market Headwinds

The primary concern for UBS is Buzzi's U.S. cement business, which constitutes approximately 45% of the company's EBITDA. The brokerage noted that conditions have worsened, particularly in the U.S. South, where Buzzi has about half of its American exposure. A surge in cheaper cement imports is directly pressuring domestic pricing.

According to the UBS report, several factors are weakening the U.S. outlook:

• Import Penetration: Imports now account for over 20% of cement consumption in Buzzi’s Southern U.S. markets, a sharp increase from 10%-12% before 2020. In Texas, the figure is above 30%.
• Widening Price Gap: The price difference between domestic and imported cement has expanded to about 50%, compared to 20%-30% a decade ago.
• Construction Slowdown: Analysts expect a slowdown in residential construction to offset growth from infrastructure and data center projects in 2027.

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As a result, UBS's forecasts for Buzzi's U.S. segment EBITDA are now 6%-12% below consensus for 2026 and 2027.

European Cost Pressures and Capital Position

In Europe, Buzzi faces a growing financial burden from a shortfall in free CO2 allowances. As these free allocations are phased out, carbon costs are expected to rise, which UBS believes will limit the earnings benefit from any potential recovery in construction, such as increased infrastructure spending in Germany.

UBS also cautioned against viewing Buzzi’s €1.2 billion-€1.3 billion net cash position as entirely excess capital. The firm noted that significant investments are planned for a major U.S. plant upgrade and increasing decarbonization efforts. The brokerage now expects Buzzi’s earnings to be 3%-12% below consensus through 2030.