JELD-WEN Is A 'Second Half Story,' Wells Fargo Says In Downgrade Note

Despite being a well-run company with “significant long-term potential," the Charlotte, NC-based window manufacturer JELD-WEN Holding, Inc. JELD may have to wait some time for another catalyst to push the stock in an upward direction, according to Wells Fargo. 

The Analyst

Stephen East of Wells Fargo Securities downgraded JELD-WEN shares from Outperform to Market Perform and lowered the stock’s target price from $45 to $37.

The Thesis

Given the highly competitive nature of the window industry and its exposure to housing market trends, margins are narrow and JELD-WEN has seen its first-quarter margins fall flat, East said in a Wednesday note. (See the analyst’s track record here.)

“We believe that ultimately the window business will have to incent more heavily to recapture lost business," the analyst said.

JELD-WEN is also exposed to risks in international markets, including raw materials costs in Europe as well as a housing recession in Australia, East said. 

Despite the short-term risks and margin pressure, the company, which went public only one year ago, has promising long-term potential, he said. 

“It is likely a second half or later story that requires confidence and patience."

Price Action

At the time of publication, JELD-WEN shares were trading down 3.91 percent at $33.15. The company reported a fourth-quarter earnings miss Wednesday.

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