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Leading brokers have recently downgraded their outlooks for several prominent S&P/ASX 200 Index shares. Despite being household names and operating across different sectors, these three companies have seen their medium-term prospects diminished by expert analysts. Here’s a look at why these ASX 200 shares may underperform in the coming year.
James Hardie Industries (ASX: JHX)
James Hardie Industries, a building materials company, has seen its shares climb 22% over the past year, yet they have declined 20% in 2024. Currently trading at AU$48.24, up 2.27% today, the company reported solid full-year results with net sales up 4% year-on-year to US$3.94 billion. However, its earnings guidance for FY 2025 fell short of expectations, citing continued uncertainty in housing markets.
In response, JP Morgan downgraded James Hardie shares to 'neutral' with a AU$50 price target, approximately 4% above current levels. Conversely, Macquarie cut its price target by 12% to AU$55 but upgraded the stock to 'outperform,' highlighting strong progress in cost and working capital reduction, and improved efficiency in procurement and R&D.
Sonic Healthcare Ltd (ASX: SHL)
Sonic Healthcare, a medical diagnostics company, has seen its shares drop 28% over the past year, although they are up 3.63% today at AU$25.44. The company’s recent earnings update was disappointing, leading to cuts in full-year revenue and earnings guidance due to inflation, adverse currency exchange rates, and delayed margin improvements.
As a result, Citi slashed its target price for Sonic Healthcare shares by 19% to AU$25, reflecting a more cautious outlook on the company’s near-term performance.
Telstra Group Ltd (ASX: TLS)
Telstra, Australia's largest telecommunications company, has seen its share price fall 21% over the past year, though they are up 1.17% today at AU$3.46. The company recently announced significant restructuring, including the layoff of 2,800 employees due to ongoing inflationary pressures.
A notable factor in the broker downgrade was Telstra's decision to eliminate annual inflation-linked postpaid mobile plan price reviews. Macquarie downgraded Telstra to 'neutral' with a AU$3.70 price target, citing the removal of these price hikes as a key negative. Analyst Darren Leung emphasized that this move could disrupt the industry’s pricing dynamics, now heavily reliant on the decisions of Telstra’s peers.
