Owens Corning Should Regain Market Share, Nomura Says In Upgrade

Owens Corning OC, a major developer and producer of insulation, roofing and fiberglass composites, is poised to reverse market share losses which started in 2016, according to Nomura.

The Analyst

Nomura Instinet's Michael Wood upgraded Owens Corning from Neutral to Buy with an unchanged $93 price target.

The Thesis

Owens Corning's market share of the fiberglass industry batts and rolls insulation stands at around 41.5 percent, Wood said in a note. But the company is now positioned to regain market share it lost over the past two years when one of the industry's biggest customers TopBuild looked to diversify its supplier base and was able to secure better prices. Owens Corning's market share dipped as low as 39 but has since recovered as its competitors run out of capacity.

Meanwhile, after rival Johns Manville opens its Mothballed plant, Owens Corning will own two of the three remaining mothballed/cold lines in the industry with CertainTeed owning the other, the analyst said. If housing demand remains strong, CertainTeed will likely turn on its line in early 2019. This would leave Owens Corning in a good position to regain market share as competitors will be more aggressively pricing their products due to a limited supply available.

Price Action

Shares of Owens Corning closed at $65.83.

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