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D.A. Davidson Sees Summit Materials Climbing Higher

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D.A. Davidson analyst Brent Thielman expects Summit Materials, Inc. (NYSE: SUM) to gain from the Cement business that offers attractive opportunities in the upcoming years for growth. The analyst retained his Buy rating and $27 price tag.

The comment comes on the heels of a meeting with management that included its CEO, Tom Hill, and others like the CFO Brian Harris. The brokerage expects price appreciation in Cement to be more than 6 percent in the current year and sees opportunity in maintaining at this level in the next few years.

The analyst pointed out that despite challenges, Summit is successful in hiking prices in Houston and Midland/Odessa though the volume is lower in these markets. The analyst noted that the company witnessed improved construction momentum in the third quarter after the weather impacted its results unfavorably in the second quarter.

"With another month left in the quarter, however, there still could be opportunity to make up for lost volume. In Austin, competitive issues previously articulated in earnings calls will weigh on EBITDA this year, though management remains confident actions taken will resolve this matter headed into 2017," the analyst said in a note.

The brokerage ranked Utah as a top three player that represented 12 percent of its sales. Though the Utah market size isn't as big as other regions, it provided options to extend its operations in the neighboring area markets. Similarly, the analyst sees strength from Carolina and Virginia markets, which together represents 9 percent of sales.

Latest Ratings for SUM

DateFirmActionFromTo
Apr 2019Initiates Coverage OnHold
Mar 2019Initiates Coverage OnNeutral
Jan 2019MaintainsBuyBuy

View More Analyst Ratings for SUM
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Posted-In: D.A. DavidsonAnalyst Color Analyst Ratings

 

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