Analyst Anticipates Tecnoglass Expansion In Vinyl Windows Market, Predicts $180M FCF In 2023

Stifel Research analyst Stanley S. Elliott initiated coverage on Tecnoglass Inc TGLS with a Buy rating and a price target of $60.

The analyst is bullish on TGLS' consistent market share growth in its multi-family & commercial, and single-family business, with sales growth of 51% organically in Q1 2023, 44% in 2022, and 32% in 2021, surpassing overall market growth. 

The analyst cites TGLS' exposure to attractive end markets such as Florida (90% of sales) and R&R (around 30%) as strengths.  

Elliott expects TGLS' vertically integrated business, lower labor costs (vs. U.S. peers), and favorable transportation to the U.S. to drive cost savings and margin expansions by 1,000 bps-2,000 bps higher than its closest peers. 

Elliott sees opportunities for TGLS' expansion in the vinyl windows market and further foothold strengthening in coastal regions (New York, Boston, DC, and the Gulf Coast).

The analyst expects TGLS' market share gains and product line and geographic expansions to drive growth in the foreseeable future.

Also, Elliott is pleased with TGLS' strong financial position and cash generation and expects it to generate an FCF of $180 million in 2023.

Elliott estimates revenues of $848.2 million in 2023 and $914.3 million in 2024 and EPS of $4.29 in 2023 and $4.66 in 2024.

Also Read: Why Tecnoglass Shares Are Sliding Today

Price Action: TGLS shares are trading higher by 7.4% at $47.84 on the last check Thursday.