Tuesday, April 2, 2024 - Evercore ISI has increased its price target for TopBuild Corp (NYSE:BLD) to $527 from the previous $469 while maintaining an Outperform rating. The upward adjustment comes in response to a revision in the housing starts outlook, which is anticipated to benefit the company due to expected growth in new residential construction activity later in the year.
The firm's analysis suggests that both TopBuild and Installed Building Products (NYSE:IBP), which serve the residential construction sector, are poised to gain from an uptick in single-family housing starts.
These companies have incorporated an estimate of approximately 1 million single-family starts for the fiscal year 2024 into their forecasts, indicating a mid-single-digit percentage increase year-over-year. However, Evercore ISI projects a more robust growth rate of 15% year-over-year.
The revised price target reflects a belief in continued product price growth, driven by persistent tightness in insulation capacity. This market condition is expected to enable TopBuild to trade at the higher end of its historical price ranges. The firm has adjusted its multiples and estimates upward for TopBuild based on these factors.
The analyst's comments highlight the direct correlation between the housing starts forecast and the performance of companies like TopBuild. With the construction industry's dynamics favoring increased residential activity, TopBuild is positioned to capitalize on these developments through the remainder of the year.
InvestingPro Insights
Following Evercore ISI's optimistic outlook on TopBuild Corp (NYSE:BLD), InvestingPro data provides additional context for investors considering the company's potential. With a market capitalization of $13.95 billion and a P/E ratio of 22.64 as of the last twelve months of Q4 2023, TopBuild is trading at a high valuation relative to its near-term earnings growth. The company's robust performance is reflected in the significant price uptick over the last six months, boasting a 76.73% return, and a stellar 110.6% return over the last year, nearing its 52-week high at 98.02% of the peak price.
InvestingPro Tips highlight that TopBuild's stock price movements are quite volatile, which may be a consideration for risk-averse investors. Nonetheless, the company's liquid assets surpassing short-term obligations and a moderate level of debt paint a picture of financial stability. For those interested in diving deeper into TopBuild's financial health and future prospects, InvestingPro offers additional insights; there are 14 more InvestingPro Tips available for TopBuild, which can be accessed for further analysis. Interested investors can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment strategy with comprehensive data and expert insights.
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