UPDATE: Raymond James Assumes Martin Marietta Materials (MLM) with a Outperform

Raymond James analyst Patrick Tyler assumes coverage on Martin Marietta Materials (NYSE: MLM) with a Outperform rating (from Market Perform) and a price target of $410.00.

The analyst comments "We are upgrading shares of MLM to Outperform from Market Perform, as we believe a number of recent headwinds could flip to tailwinds into 2023 and beyond — possibly ahead of what the market appreciates. To this point, after the highest inflation in 40 years and a surge in aggregates pricing, the jumping off point for aggregates pricing into ‘23 already supports further y/y price gains even before contemplating any additional pricing actions the market may afford. Further, were unit cost inflation (incl. or ex. energy) to ease/roll and/or were the market to support further price increases (past what’s modeled), this could provide margin expansion opportunities beyond what is contemplated. While concerns over resi construction swirls, rock demand could be uniquely approaching an inflection point that could fundamentally drive a “rock demand rotation” from residential to non-residential and public projects, given the lagged nature of non-residential construction and increased public lettings as IIJA (infrastructure bill) funding builds into 2023 and 2024. Further, we believe MLM’s “strategic cement” (~15% of gross profits) remains advantageously positioned in the very healthy (sold out) Texas market, and a longer-term expansion at its key Midlothian, TX, plant and the introduction of additional Portland Lime Cement could enhance clinker capacity and afford growth in coming years. Finally, with MLM trading at <14x our ’23 EBITDA, a modest premium to the S&P 500 (vs. larger premium in the past at times) and a slight discount to its “Big 3” Waste peers (despite historically trading at a premium), we see both positive earnings-drift and re-rating upside for what we perceive to be a compounding business."

For an analyst ratings summary and ratings history on Martin Marietta Materials click here. For more ratings news on Martin Marietta Materials click here.

Shares of Martin Marietta Materials closed at $368.92 yesterday.

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