Citi Downgrades Azek Co. (AZEK) to Neutral

Citi analyst Anthony Pettinari downgraded Azek Co. (NYSE: AZEK) from Buy to Neutral with a price target of $51.50 (from $61.00).

The analyst comments "We are downgrading AZEK to Neutral following JHX’s announced acquisition of the company. AZEK closed today at $48.56, compared to an implied offer of ~$51.50 ($26.45/share in cash + $25.07/share in stock, using JHX’s most recent ADR closing price). We expect the deal to close and, given relatively limited upside to our $51.50 target, we move to Neutral. While AZEK shareholders may question the size of the premium (compared with AZEK’s pre-deal 52-week high of $54.91/share), R&R conditions are weakening and we see the industrial logic of the proposed deal in a consolidating US Building Products sector. Both companies: 1) are category leaders with a history of +DD% sales growth; 2) benefit from long-term trends in material conversion; and 3) have strong positions with pro contractors that can drive commercial synergies. We don’t see regulatory obstacles to the combination; we also don’t see obvious competing bidders."

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

Shares of Azek Co. closed at $48.56 yesterday.

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