Construction Partners' Growth Opportunities Prompts 40% Price Target Boost By This Analyst

Raymond James analyst Patrick Tyler Brown raised the price target for Construction Partners Inc ROAD to $35 (an upside of 17%) from $25 while maintaining the Strong Buy rating on the shares.
The analyst believes the compounding benefits of organic and external growth opportunities set the stage for material upside to numbers in out years. To this point, ROAD is largely levered towards highly recurring milling and paving services, he noted.
Brown states that ROAD's advantageous geographic footprint, improving state DoT funding, and the recent passage of the Infrastructure Investment & Jobs Act (IIJA) should continue to buoy organic growth opportunities.
The analyst mentions that while the rise in costs has pinched margins, given ROAD's short duration backlog, much of the "pre-inflationary" backlog has been "burnt."
Brown is enamored with ROAD's track record of external growth through acquisitions and believes acting as a vertically-integrated consolidator in a fragmented market affords opportunities in both new and existing markets.
Price Action: ROAD shares are trading lower by 0.42% at $29.47 on the last check Friday.

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