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Argus Initiates Owens Corning Coverage At Buy, Sees Above-Average EPS Growth Ahead

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December’s heating up for Owens Corning (NYSE: OC).

The building materials firm caught an RBC Capital upgrade from Outperform to Top Pick on Monday, and Argus came out equally positive on the stock Wednesday.

The Rating

Analyst Michael Jaffe initiated coverage of Owens Corning with a Buy rating and a $109 price target.

The Thesis

Owen Corning has steadily risen 70 percent year-to-date and 154 percent over the last five years. But Argus thinks things can only get better.

“Although Owens Corning is a cyclical company subject to changes in the housing and construction markets, we believe that conditions in these markets remain strong and expect the company to post solid results over the next several years,” Jaffe wrote in a Wednesday note.

In October, the firm acquired Paroc Group, a manufacturer of mineral wool insulation, in a $1.1 billion deal forecasted to be accretive to 2018 earnings, generate synergies by 2020 and significantly increase overseas sales.

Paroc, combined with the recently acquired cellular glass maker, Pittsburgh Corning, and roofing underlayment producer, InterWrap, are also seen to drive an 8-percent sales increase in 2018. The surge is expected to catalyze an 18-percent increase in earnings per share.

Price Change

Despite the Argus endorsement, Owens Corning fell 2.6 percent Wednesday to a rate of $86.55.

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Latest Ratings for OC

Oct 2018Credit SuisseMaintainsNeutralNeutral
Oct 2018BarclaysUpgradesEqual-WeightOverweight
Oct 2018Seaport GlobalDowngradesBuyNeutral

View More Analyst Ratings for OC
View the Latest Analyst Ratings

Posted-In: Argus Michael JaffeAnalyst Color Price Target Initiation Analyst Ratings


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