Brokers ABN Amro Craigs, which retains a buy recommendation on the stock, has revised its 12-month target price down almost 30% from $12.64 to $9.20.
Despite the share price downturn and target downgrade, ABN broker Peter McIntyre maintains a positive view for Fletcher Building, underpinned by the New Zealand and Australian Governments' likelihood of increasing funding for infrastructure projects and providing more low-cost housing while the remaining construction sector slows.
"Apart from the uncertainty triggered by the global financial crisis, which is having an adverse impact on the share price, Fletcher's business is running well,'' he said.
The company still had more than $1 billion in order in New Zealand alone.
In mid-February, Fletcher's shares were surprisingly punished by investors despite the multidivision global company booking increased revenue and after-tax profits of 19% and 22% respectively for the half-year to December, in the face of challenging markets.
Fletcher shares had opened at $9.15 but steadily traded down to lose about 3% overall and close at a 16-month low of $8.87, wiping more than $150 million off its $5.07 billion market capitalisation.
Mr McIntyre said Fletcher's strengths lay in it remaining a market leader. It had the ability to undertake large jobs and had access to up to $500 million for acquisitions.
"With its many divisions, when one sector is slow, another division has the capacity to outperform".
Fletcher management had reaffirmed its earlier forecast of producing an after-tax profit of $NZ450 million-$NZ460 million.