UPDATE: Credit Suisse Upgrades USG Corporation to Neutral on Share Price Decline, Market Checks
In a report published Monday, Credit Suisse analyst Daniel Oppenheim upgraded the rating on USG Corporation (NYSE: USG) from Underperform to Neutral, and raised the price target from $22.00 to $27.00.
In the report, Oppenheim noted, “Our $27 target (from $22) is based on the present value of 7.5x our new $725 mln+ mid-cycle EBITDA est. (up from $650 mln previously) plus present value credit of $4.35/share for DTAs. We would turn more constructive if valuation comes in further or if we see signs that operating leverage is more significant/sustainable than we now est. Market checks over the past month point to pricing sticking and volumes remaining solid: Wallboard market checks we've recently conducted suggest price increases of approx. 20% have stuck, with limited impact to volumes given the strengthening residential housing environment. Distributors who deal more with commercial/non-res have yet to see meaningful volume improvement, though we would anticipate stronger trends as the year progresses and in 2014. We now expect wallboard pricing +20% in 2013 and +8% in 2014 (up from +12% and +5% previously).”
USG Corporation closed on Friday at $24.55.
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