Market Overview

Builders FirstSource: What Credit Suisse Is Saying

Share:
  • Builders FirstSource, Inc. (NASDAQ: BLDR) shares have jumped 110 percent since April, when they hit a low of $6.84.
  • Credit Suisse’s Michael Dahl initiated coverage of the company with a Neutral rating and a price target of $14.
  • The company’s growth is dependent on its ability to realize the targeted synergies to grow EBITDA and reduce leverage, Dahl stated.

Analyst Michael Dahl pointed out that the ProBuild acquisition has transformed Builders FirstSource from “a $1.6 bln building products supplier focused on the Southern U.S. into the largest national supplier in the pro dealer market, with $6.1 bln in sales (FY14A pro forma) and 444 locations in 74 of the top 100 MSAs.”

The synergies from the acquisition are expected to boost Builders FirstSource’s earnings growth in the near future. Dahl added that the company is also poised to benefit from continued recovery in the housing segment.

Dahl expects modest acceleration in new construction and improving R&R to boost the company’s pro forma sales. This, coupled with annual synergies from the acquisition, will lift the merged entity’s EBITDA margins from 4.4 percent in 2014 to 7.3 percent in 2017.

Builders FirstSource’s growth prospects are offset by its highest financial leverage in the building products segment, the Credit Suisse report stated, while adding that the interest burden constrains flexibility.

The company is not expected to have excess free cash flows in the first year after the acquisition; therefore significant deleveraging is unlikely before 2H16, Dahl said.

Latest Ratings for BLDR

DateFirmActionFromTo
Oct 2020BTIGReiteratesBuy
Aug 2020Deutsche BankUpgradesHoldBuy
Aug 2020BarclaysUpgradesEqual-WeightOverweight

View More Analyst Ratings for BLDR
View the Latest Analyst Ratings

 

Related Articles (BLDR)

View Comments and Join the Discussion!

Posted-In: Credit Suisse Michael Dahl VetrAnalyst Color Initiation Analyst Ratings

Latest Ratings

StockFirmActionPT
FBTruist SecuritiesMaintains310.0
AMZNBenchmarkMaintains4,000.0
GOOGLDeutsche BankMaintains2,250.0
FBWells FargoMaintains330.0
TWTRMizuhoMaintains48.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com