Eagle Materials (EXP) Seeing Good Momentum, Cement Sold Out, Price Increase Coming, Jefferies PT to $165
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Jefferies analyst Philip Ng lowered the price target on Eagle Materials (NYSE: EXP) to $165.00 (from $174.00) noting the company is seeing good pricing momentum in cement & wallboard, with the cement market sold out. This is partially offset by higher energy & freight costs.
The analyst reiterated a Buy rating, stating "With EXP trading with a 9% FCF yield, we believe it's undervalued, and mgmt has the authorization to buyback 25% of its shares." "We see cement demand remaining strong, which is levered to infrastructure & mgmt highlighted robust state & local funding, and a healthy bump in demand from the infrastructure bill. The mkt is sold out, which should allow the industry to continue to push price & stay in front of inflation. EXP and its competitors are out with a ~$10/ton July price increase, which should see good traction, offsetting the ~10% increase in energy costs (~1/3rd of cement costs), which EXP has already locked in for FY23."
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