Piper Jaffray Upgrades NCI Building Systems (NCS) to Buy; Adds to Alpha List

August 18, 2008 8:06 AM EDT

Piper Jaffray upgrades NCI Building Systems (NYSE: NCS) from Neutral to Buy and increases their price target from $36 to $47. The firm also raises their FY08E EPS from $3.37 to $3.52, and increases their FY09E EPS from $3.49 to $3.65.

Piper Jaffray adds NCS to the Piper Jaffray Alpha List because they expect strong Q3 results and an upward revision to FY08 guidance. This will be a positive catalyst for the heavily shorted shares, in the firm’s view.

The firm said, "While we remain concerned about the outlook for nonresidential construction, we believe that NCI Building Systems is poised to report better-than-expected 3Q results and raise FY08 guidance. We attribute this strong performance, in the face of weakening economic conditions, to favorable pricing on steel building products and internal cost control efforts. We believe the company has implemented price increases approaching 15% on average, which combined with efficiency gains in the engineered building systems segment should maintain firm-wide gross margins in the 24%-25% range in 2H08. The company's backlog entering 3Q provides visibility for 2H08 and we believe order activity has remained relatively stable despite concerns of softening demand."

NCI Building Systems, Inc. provides metal products for the nonresidential construction industry in North America.

Related Categories

Upgrades

Stocks Mentioned

Related Entities

• Piper Jaffray
• Piper Jaffray Alpha List
• Raising Prices

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?