JPMorgan on Americas Construction Materials: 'CX Best Positioned', 'Our preferred pecking order for the space...'.

The analyst comments "Ahead of 3Q26 earnings results, which kick off towards the end of the month, and following recent conversations with our companies, we are updating our 3Q and FY26 estimates. We broadly expect most companies in our coverage group to revise FY26 guidance downward and for 3Q estimates to move lower into the prints as margin headwinds persist—particularly for aggs producers given the further increase in diesel fuel costs since 2Q and weak mid-year pricing realization. While cement operations are more insulated from energy cost headwinds, limited pricing realization and subdued demand are likely to weigh on margins for these names as well. Meanwhile, we believe vols are likely to be muted in 3Q due to a tough comparison to last year and weather headwinds for some names, particularly due to wet weather in the Midwest and Eastern markets. Importantly, diesel costs were +52% y/y in 2Q while in 3Q they are +38%, and if current prices remain, 4Q will be +66%. We expect the names to largely trade sideways into year-end, but see potential downside risk if the 2027 outlook deteriorates and interest rates continue to move higher. Meanwhile, following a period of restriction, we are moving CRH to an Overweight rating with a December 2027 price target of $115 (OW rating and December 2026 price target of $140 prior to restriction) from a Not Rated designation; see herein for our rationale. Our preferred pecking order for the space: CX (OW) > MLM (OW) > CRH (OW) > GCC (OW) > VMC (N) > AMRZ (N) > EXP (N) > KNF (UW); but for the quarter we view CX as best positioned due to CX’s potential upside from cost savings and solid performance in Mexico."