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REH: Share Buyback Will Support Margins And Future Earnings Power

Digital Transformation Will Leverage Urbanization And Sustainable Demand

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REH
AnalystHighTarget
Not Invested
Published 29 Jun 2025

Update shared on 12 Dec 2025

Fair value Decreased 28%
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AnalystHighTarget's Fair Value
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1Y
-47.2%
7D
1.2%

Analysts have lowered their price target on Reece from approximately $19.52 to $14.04. This reflects a more cautious view on margins and valuation multiples, even as revenue growth expectations improve.

What's in the News

  • The Board of Directors has authorized a new share buyback plan for Reece Limited, which signals confidence in the company’s balance sheet and future cash generation (Key Developments).
  • Reece Limited (ASX:REH) has launched a share repurchase program of up to 36.4 million shares, with a total value of AUD 400 million (Key Developments).
  • The buyback price range has been set between AUD 11.00 and AUD 13.00 per share, with all repurchased shares to be cancelled (Key Developments).
  • The buyback will be funded from the company’s general pool of funds, with a pro rata scale back mechanism applied for applications above 350 shares, and a record date for eligibility of September 26, 2025 (Key Developments).
  • The buyback program will remain open until October 17, 2025, which provides a defined window for shareholders to participate (Key Developments).

Valuation Changes

  • The fair value estimate has fallen significantly from A$19.52 to A$14.04, reflecting a more conservative view of Reece’s intrinsic value.
  • The discount rate has risen slightly from 7.89 percent to 8.02 percent, indicating a modest increase in perceived risk or required return.
  • Revenue growth has risen meaningfully from 5.26 percent to 7.29 percent, signalling higher expectations for top line expansion.
  • The net profit margin has fallen notably from 5.30 percent to 4.08 percent, pointing to more cautious assumptions on profitability.
  • The future P/E multiple has reduced from about 28.6x to 25.2x, implying a lower valuation multiple applied to Reece’s forecast earnings.

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