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Sell-side analysts have started coverage Foundation Building Materials Inc (NYSE:FBM), which made its trading debut last month.
Foundation Building Materials, which was founded in 2011, has grown primarily via acquisition and is the second largest national player in both gypsum specialty and mechanical insulation distribution.
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Sector Consolidator
Scott Schrier of Citi started the stock with a Buy rating and $20 target price, saying the company continues to consolidate the specialty building products distribution space amid an uptick in pricing.
“We’re starting to see evidence of better pricing power in wallboard as capacity utilization tightens, while ceilings benefits from both traction on pricing actions as well as mix shift to higher priced products,” Schrier wrote in a note.
Barclays’ Michael Dahl also said he believes Foundation Building Materials is a new and aggressive acquirer in an industry undergoing a consolidation phase, initiating the stock with a Buy rating and $19 price target.
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Dahl says the company is set for de-leveraging that should create additional "dry powder" for the deal strategy. Additional M&A should augment share gains and greenfield openings ahead.
“For FBM, we see ~$125+ mln in "dry powder" for M&A over the next two years as it de-levers,” Bahl wrote in a note.
Company-Specific Risks
Meanwhile, Baird prefers to remain on the sidelines, with a Neutral rating and $18 price target, given certain company-specific risks including ability to manage rapid growth, recency of the Winroc-SPI acquisition, and overall higher leverage.
“Weighing these factors vs. industry and company-specific positives, investors may seek a wider margin of safety,” analyst David Manthey wrote in a note.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.