JPMorgan Upgrades Azek, Downgrades Trex, Installed Building Products

JPMorgan analyst Michael Rehaut upgraded Azek Company Inc AZEK to Overweight from Neutral and raised the price target to $56 (an upside of 31%) from $54.
The analyst believes Azek's valuation - currently trading at "near-record high discounts" to Trex Company Inc, does not fully reflect the company's fundamental prospects over the next two years as well as on a longer-term basis.
Rehaut estimates residential sales growth of 20% and 12% in fiscal 2022 and 2023, respectively, driven by several factors, including material conversion continuing in the decking market as well as Azek's capacity expansion supporting its growth initiatives.
Rehaut downgraded Trex Co TREX from Neutral to Underweight and announced a price target of $135 (an upside of 1%).
The analyst expects relative underperformance in the next six to 12 months.
Rehaut noted Trex' total return of 63% YTD outpaced the 20% average increase for JPMorgan's building products universe, "As a result, following the stock's strong 2021 performance and full valuation, the latter of which is likely fully pricing in a continued strong fundamental performance in 2022, we prefer a better entry point for Trex (TREX), at least on a relative basis."
Rehaut downgraded Installed Building Products Inc IBP to Neutral from Overweight with an unchanged price target of $166 (an upside of 21%).
The analyst downgrades the shares on valuation following the stock's 34% gain year-to-date. Rehaut believes Installed Buildin's valuation fairly reflects the company's "positive fundamental attributes."
Price Action: AZEK shares are trading higher by 1.82% at $42.85, IBP higher by 0.5% at $137.18, and TREX lower by 2.27% at $133.69 on the last check Wednesday.

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