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FBR Cuts Target on Owens Corning (OC) to $46; Notes Positives, Negatives Following Prelim. Q2 Results

June 20, 2014 2:23 PM EDT
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Price: $166.80 -0.25%

Rating Summary:
    13 Buy, 22 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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FBR Capital is lowering its price target on Owens Corning (NYSE: OC) from $50 to $46 following preliminary Q2 numbers from the company.

Analyst Alex Rygiel noted that a late start to the 2014 construction season likely impacted numbers and is exacerbated by a competitive roofing industry.

Rygiel comments on both sides of the issue:

Positives for Owens Corning:

  1. Composites and insulation appear on plan; and

  2. Owens Corning has witnessed some improvement in roofing demand in the month of June but not enough to offset the slow start to the quarter.
Negatives:
  1. (1) The roofing segment continues to suffer from weaker demand, which is likely partly due to difficult winter weather. Retail and lumber yard sales activity is below plan, and although the distribution channel is somewhat uncertain, it too is likely to be witnessing soft consumer demand;

  2. It is possible that the company lost additional market share in 2Q within the roofing segment as it did in 1Q;

  3. Asphalt costs, a key raw material for roofing products, have risen during the quarter, likely creating further headwind near term;

  4. A price increase for roofing products in May is unlikely to be successful given the lack of demand and could be partly a reason for weaker demand; and

  5. Investor patience appears to be strained and, now with two sequential quarters of weak roofing results, is likely to persist for some time.

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

Owens Corning closed at $41.30 yesterday.



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