Construction Partners: Baird Sees Long-Term Investment Opportunity In Contractor's Stock
Shares of Construction Partners Inc (NASDAQ: ROAD) began trading on the Nasdaq May 4. The company recently announced it will release its fiscal second-quarter results June 4.
The Analyst
Baird Equity Research's Andrew Wittmann initiated coverage of Construction Partners at Outperform with a price target of $15.
The Thesis
Construction Partners is an infrastructure pure play with a steady business that comes from exposure to predictable maintenance-related state and local transportation spending budgets, the analyst said in the Tuesday initiation note.
Baird expects 5-7-percent organic revenue growth combined with modest margin expansion and mid-teens EPS growth. In the initiation note, Wittmann named the following reasons why the stock represents a long-term investment opportunity:
- Relatively predictable returns, as the company generates around 70 percent of its revenue from the public sector.
- Construction Partners' risks do not typically include large project cost overruns or a dependence on multiple permits for construction starts, because it primarily competes against local, family-owned companies on projects with an average size of $1.7 million.
- The company targets markets with relatively less competition and is generally better capitalized than the competition.
- Acquisitions complement Construction Partners' organic strategy, Wittmann said. It has an identifiable pipeline of relationship-sourced acquisition opportunities and a management team with nearly 40 years of local market experience.
The Price Action
Construction Partners was trading lower by 1.3 percent at the time of publication Tuesday afternoon.
Related Links:
Benzinga's Top Upgrades, Downgrades For May 29, 2018
Latest Ratings for ROAD
Date | Firm | Action | From | To |
---|---|---|---|---|
Feb 2021 | Raymond James | Maintains | Outperform | |
Dec 2020 | Raymond James | Maintains | Outperform | |
Nov 2020 | B of A Securities | Maintains | Buy |
View More Analyst Ratings for ROAD
View the Latest Analyst Ratings
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