Stephens Analyst Sees 17% Upside In Trex

Stephens analyst Trey Grooms upgraded Trex Company Inc TREX to Overweight from Equal Weight and raised the price target to $120 (implying an upside of 17%), from $111.
Grooms states that Trex is the leader of the composite decking industry, and yesterday's announcement to significantly expand capacity "will further cement its long-term growth prospects and leading market position."
The analyst says that while 2021 will likely bring growth deceleration on tough compares, the long-term demand picture for Trex "is compelling."
The company is not immune to cost inflation, but is the best positioned given its high use of recycled content, notes Grooms.
Recently, Trex announced plans to develop a new multi-faceted production site in Little Rock, Arkansas. The company expects to invest an estimated $400 million over the next five years to develop the new Arkansas site, funded primarily through ongoing cash generation.
Price Action: TREX shares closed higher by 4.79% at $102.70 on Wednesday.