Construction Partners: Strong Growth Potential and Strategic Positioning Justify Buy Rating

Construction Partners (ROAD – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Michael Feniger from Bank of America Securities reiterated a Buy rating on the stock and has a $117.00 price target.

Michael Feniger has given his Buy rating due to a combination of factors that highlight Construction Partners’ strong growth potential and strategic positioning. The company has raised its organic growth target, particularly in the Southeast and Sunbelt regions, which are outperforming the national average. This growth is supported by the company’s ability to leverage its bonding capacity, allowing it to bid on multiple projects and expand its market share.
Additionally, Construction Partners is benefiting from industry consolidation trends similar to those seen in the aggregates sector, which supports favorable pricing dynamics. The company’s vertical integration, exemplified by Lone Star’s operations, presents opportunities for margin improvement. Furthermore, while the company is currently focused on reducing leverage, there remains significant potential for mergers and acquisitions, particularly in new markets like Oklahoma, Texas, and Tennessee. The healthy backlog and positive demand environment further justify the Buy rating, with a price objective set at $117.

Based on the recent corporate insider activity of 65 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ROAD in relation to earlier this year.