Morgan Stanley has maintained its 'Overweight' rating on Cemex, raising its price target to US$14.00 from US$13.00.
It believes that the Mexican cement major could be turning the corner in its domestic market where demand will be driven by infrastructure in the first half of the year, and by retail and housing projects in the latter half.
Morgan Stanley analysts Nikolaj Lippmann and Lillian Starke, have said that the Cemex-Holcim asset swap deal announced in August 2013 could be the first of several moves. " Consolidation in Mexico's cement industry came into focus after the Cemex-Holcim asset swap last year," the report noted. Further consolidation could be a game-changer with regard to the long-term profitability of the market."
However, even without consolidation supply looks more disciplined, Morgan Stanley notes, and several plants could be delayed. This could create a window for Cemex from 2015-17 it adds, with consolidation extending this.
