BMO Capital Markets Analyst Ketan Mamtora raised the price target from Beacon Roofing Supply Inc BECN from $75 to $90 while maintaining the Outperform rating.
The analyst is confident in BECN’s medium-term growth, its margin expansion initiatives and its ability to weather difficult economic conditions.
Management noted that demand for new housing (20% of total roofing demand) is improving better than expected at the start of 2023.
In addition, the company expects demand for new roofs in California to increase due to unfavorable weather and relatively stable prices.
Mamtora cites BECN’s plans to launch new product lines, increase digital penetration, and implement cost and efficiency improvement initiatives.
The analyst is optimistic about BECN’s strong balance sheet and the scale of mergers and acquisitions. He expects higher share buybacks in the absence of major acquisitions.
Related: Beacon Roofing Expands in Nevada Through Strategic Acquisition
Mamtora raised its estimate for 2023 EBITDA to $840 million (from $821 million) and 2024 to $850 million (from $830 million) due to lower than expected declines in single-family home formation and the short-term improvement in new roofing business in California.
The analyst also raised earnings per share estimates for 2023 and 2024 to $6.14 each (from $5.95).
Today the company announced further expansion plans for its specialty waterproofing division, naming a broader leadership team and opening two new offices in key Florida markets.
price action: BECN shares are trading up 0.14% at $79.57 at last check on Friday.
www.benzinga.com
https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32895029/beacon-roofings-financial-health-m-a-potential-and-expansion-initiatives-prompt-ana
