On Wednesday, Loop Capital has increased its price target on shares of Eagle Materials (NYSE:EXP) to $290 from $265, while retaining a Buy rating on the stock. The adjustment follows the company's first-quarter fiscal year 2025 results, which surpassed expectations due to robust operating margins in both cement and wallboard sectors.
Eagle Materials reported that despite concerns about adverse weather conditions impacting their business, cement volumes were higher than anticipated. This has implications for the broader aggregates and cement industry during this earnings season, suggesting that pricing and margins could help mitigate concerns over volume reductions.
The firm's operating margin outperformance was attributed to strong pricing and reduced costs for natural gas and other energy-related expenses. While wallboard pricing was slightly ahead, even after accounting for distribution costs, cement pricing was marginally below expectations. Nevertheless, the overall segment operating margins are being adjusted upwards, particularly for wallboard.
Loop Capital expressed optimism regarding the resilience of the wallboard segment, anticipating that any competitive pressures from a slowdown in residential construction demand would likely be short-lived and not severe. This sentiment is based on the current performance and margin outlook.
The new price target of $290 represents a $25 increase and is based on an 11.5 times multiple of the firm's projected fiscal year 2026 EBITDA. Loop Capital's continued endorsement of a Buy rating reflects confidence in the company's shares moving forward.
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