Analysts Raise Trex Price Target On Solid Q3 Results

  • BMO Capital analyst Ketan Mamtora raised the price target on Trex Company Inc TREX to $105 from $98 and maintained a Market Perform rating on the shares after its Q3 earnings beat. 
  • Mamtora mentions the company benefits from "strong" composite decking demand while its market share gains from wood accelerate to 200bps.
  • Mamtora further cites Trex's strong balance sheet that provides the company with financial flexibility and notes its 31-times expected forward EBITDA multiple that warrants a neutral stance.
  • Barclays analyst Matthew Bouley raised the price target to $116 from $114, implying an 11% downside, and maintained an Equal-Weight rating on the shares.
  • Stephens & Co. analyst Trey Grooms raised the price target to $134 from $120, suggesting a 2% upside and an Overweight rating on the shares.
  • B. Riley analyst Alex Rygiel raised the price target to $121 from $108 and maintained a Neutral rating on the shares following the "solid" Q3 results. The analyst keeps a Neutral rating due to valuation.
  • DA Davidson analyst Kurt Yinger raised the price target to $120 from $100 but kept a Neutral rating on the shares. 
  • Yinger says the company's Q3 results and Q4 guidance look encouraging amid continued robust Residential demand, early progress on restoring gross margins, and solid execution despite the supply chain challenges.
  • Yinger adds, however, that a neutral stance is warranted given the stock's "rich" valuation.
  • Baird analyst Timothy Wojs raised the price target to $120 from $108 and maintained a Neutral rating on the shares. 
  • The analyst said his thesis exiting the quarter remains unchanged. He believes the company remains well-positioned longer-term to capitalize on secular trends, but with channel inventories beginning to normalize, he believes the risk/reward at current levels is balanced.
  • Recently, Trex reported Q3 results, with a consolidated net sales increase of 45% year-over-year to $336 million, beating the consensus of $325.63 million. EPS of $0.64 topped the consensus of $0.58.
  • For Q4, the company expects sales of $295 million - $305 million, above the consensus of $276.3 million.
  • Price Action: TREX shares are trading higher by 13.3% at $131.15 on the last check Tuesday.
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