Wedbush Remains Sidelined on Headwaters (HW) Ahead of 3Q Earnings Release

Wedbush maintained a Neutral rating and $21.00 price target on Headwaters (NYSE: HW) following a 3Q preview, ahead of earnings results. On July 5, HW effectively redeemed $47.25 million of the $150 million face value, 7.25% Senior Notes, unsecured debt due in 2019. Current AEBITDA guidance stood in the range of $185-200 million, or mid-point of $192.5 million vs. consensus estimate of $195 million and WS of $200 million. Earnings are expected to be released on August 2 before market opens.

Analyst Al Kaschalk commented, "With ample fly ash available, we continue to look for Headwaters (HW) to make capital investments in the storage, logistics and terminal network to address regional dislocations that negatively impacted the short-term supply of fly ash within certain markets of HW’s Construction Materials (CM) segment. For Building Products (BP), HW’s repair and replacement (R&R) volumes are benefiting from an improving housing backdrop and recent M&A and we believe this should continue. For long-term shareholders, we would add to current position up until our price target knowing that management remains committed to profitably growing adjusted EBITDA (AEBITDA) on strong contribution margin. For investors looking to put new money to work, 3Q results are expected to provide an update on the supply environment for CM. Accordingly, we are maintaining our NEUTRAL rating on shares of Headwaters."

For an analyst ratings summary and ratings history on Headwaters click here. For more ratings news on Headwaters click here.

Shares of Headwaters closed at $18.70 yesterday.

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