Builders FirstSource, a leading home-building company, received positive attention from Wall Street following its recent investor day and imminent inclusion in the S&P 500. The company’s stock saw a 2.4% increase, reaching $146.67.
In a report by B. Riley Securities analysts Alex Rygiel and Min Cho, Builders FirstSource was praised for its exemplary performance within the home-building industry. The analysts upgraded the stock to Buy from Neutral and raised their price target to $177 from $128 while adjusting their estimates.
Rygiel and Min Cho highlighted Builders FirstSource as a best-of-breed company in the home-building ecosystem, with a clear focus on shareholder-friendly capital allocation policies. They also noted that the company is on the verge of a significant shift in investor perception—from a low-multiple commodity play to a services-and-solutions provider. This change in perception could potentially lead to a doubling of the company’s share price over the next three years.
During the investor day event, B. Riley observed several positive aspects about Builders FirstSource. These included the company’s long-term targets, opportunities for organic growth and mergers and acquisitions, and an improved profit-margin outlook. Builders FirstSource told shareholders to expect approximately 17% adjusted earnings growth and 9% revenue growth from 2024 to 2026.
Investors have reason to be optimistic as well. After experiencing a 27% drop from August to October, the stock rebounded with a 24% increase in November. Year-to-date, the stock has seen an impressive surge of 129%, on track for its best year since 2019, according to Dow Jones Market Data. Builders FirstSource has consistently delivered solid gains, boasting an average calendar-year return of 42.4% from 2008 to 2022.
Reuben Garner, an analyst from Benchmark, has a Buy rating on the stock and a price target of $200. Garner believes that there is still room for multiple expansion and considers Builders FirstSource as the top choice in the new housing market.
According to FactSet, the majority of analysts share a bullish outlook on the stock, with 73% rating it as a Buy.