Trex (TREX) PT Raised to $61 at UBS on Changes to Distribution Network
UBS analyst John Lovallo raised the price target on Trex (NYSE: TREX) to $61.00 (from $59.00) while maintaining a Buy rating.
The analyst commented, "Trex announced changes to its North American distribution network, including naming Specialty Building Products (SBP) as its sole national distributor for decking and railing product, while stepping away from Boise Cascade (BCC). The company also fortified its regional distribution footprint through WS Building Materials, Coastal Forest Products and BlueLinx. TREX noted that the move aligns with one of it’s long term growth initiatives, “Optimizing Our Channels for Growth,” and reflects continued consolidation across the broader building products distribution industry. Management also highlighted that SBP’s acquisition of OrePac last year established it as a nationwide distributor, while its strong revenue growth CAGR of more than 20% since 2016 positioned it as an attractive partner to support Trex’s expansion objectives. While today's announcement appears to contain strategic logic, questions remain regarding the terminated relationship with BCC and the opportunity this decision may present for TREX's largest competitor."