Deutsche Bank Initiates Coverage on Installed Building Products with a Buy

In a report published Monday, Deutsche Bank analyst Nishu Sood initiated coverage on

with a Buy rating and an $18.00 price target. Sood noted that Installed Building Products is the second largest insulation contractor in the U.S. and should benefit from the insulation pricing growth. The analyst added that additional growth is expected from due to the company's exposure to single-family US housing market, which is expected to grow faster than multi-family and remodeling. Deutsche Bank continued, “with 17% market share IBP has ample opportunity for further acquisitions, although none are currently included in our estimates.” The analyst noted that near-term concerns including extreme winter weather and the impact of the housing soft patch in 2H13. Despite these concerns, Sood wrote that investors remain optimistic on longer-term housing projects. Optimistic on shares, Deutsche Bank reminds investor of risks surrounding Installed Building Products including “trends in residential new construction, which are in turn impacted by access to credit, mortgage rates, home prices and employment. More recently weather trends in IBP's markets may have caused disruptions in new construction trends, thus weather is an additional risk for IBP. Additional risks include the complexity of labor management and regulations as well as any charges resulting from these issues.” Shares of Installed Building Products closed at $14.72 on Friday.