On Thursday, Loop Capital initiated coverage on JELD-WEN (NYSE:JELD) Holding, Inc. (NYSE:JELD), a global manufacturer of building products, with a Hold rating and set a price target of $22. The firm considers the current valuation levels to offer a balanced risk/reward outlook. JELD-WEN has been recognized for its potential to enhance shareholder value through restructuring efforts overlooked by past management.
JELD-WEN embarked on a strategic three-phase plan in the calendar year 2023, successfully realizing $100M in cost savings. This was achieved by divesting non-core assets, closing underutilized facilities, and significantly reducing working capital. As the company moves into the second phase of its transformation in 2024, it plans to focus on profitable growth. The improved financial position of JELD-WEN is expected to provide the flexibility needed to invest in high-return capital expenditure projects.
The company is also anticipated to benefit from a rise in demand for single-family new construction. This comes as mortgage rates have declined from their peak, and homebuilder confidence seems to be on an upswing. The potential for multiple interest rate cuts by the Federal Reserve is also seen as a positive development for JELD-WEN's market.
Despite these favorable factors, the residential repair and remodel (R&R) end market continues to face challenges due to higher credit costs and a lack of existing housing turnover. However, retail channel de-stocking largely wrapped up in the fourth quarter of 2023, and there is hope that lower interest rates could stimulate remodeling activity and home sales later in the year.
Loop Capital's price target of $22 for JELD-WEN is based on a 7.5 times multiple of the firm's forecasted fiscal year 2024 EBITDA of $392M. The company's progress in its long-term strategic plan, which emphasizes profitable growth, will be closely monitored for any signs of improvement in residential R&R demand or other positive developments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.