This Beacon Roofing Analyst Sees The Stock Touching Roof On Strong Residential Market Fundamentals

RBC Capital analyst Mike Dahl upgraded Beacon Roofing Supply Inc BECN from Sector Perform to Outperform at an increased price target of $94 from $91.

The analyst is bullish on the stock on favorable roofing industry fundamentals, which suggests continued strength in the residential roofing market in the near term, lean inventories, and a robust growth outlook for Q4 FY23 and Q1 FY24. 

The analyst now expects Q3 residential volumes of +14% vs. +8% prior, driving sales/day estimate to +11% vs. +8% earlier. 

On the other hand, the analyst says that the non-residential is 'still seeing puts and takes' around volume and price on de-stocking and difficult comparables and cites a matter of concern for FY24. 

Dahl increased sales estimates to $9.05 billion (from $8.85 billion) for FY23, with residential sales growth of +12% (+4% price/+7% volumes) vs. +8% expected earlier. Also, for FY24, he upped sales estimates of $8.95 billion (from $8.76 billion prior vs. $9.15 billion street view).

Dahl raised adj. EBITDA estimates to $921 million (from $885 million, vs. street view of $883 million) for FY23 and $879 million (from $852 million vs. consensus of $914 million) for FY24.

The analyst also boosted Q3 estimates for sales to $2.65 billion (from $2.56 billion earlier, vs. street view of $2.58 billion and adj. EBITDA estimates to $319 million (from $301 million) vs. the consensus of $296 million.

Also Read: Beacon Roofing Raises $500M Through Debt Offering

Price Action: BECN shares are trading higher by 0.86% at $75.90 on the last check Thursday.