Wells Fargo analyst Timna Tanners maintained a Buy rating on Commercial Metals Company yesterday and set a price target of $64.00.
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Timna Tanners has given her Buy rating due to a combination of factors surrounding Commercial Metals Company’s strategic acquisition and market positioning. The recent acquisition of Concrete Pipe & Precast is seen as a significant move that aligns with the company’s strategy to expand its Emerging Business Group segment. This acquisition is expected to enhance the company’s portfolio with asset-light, higher-margin products, contributing positively to its financial performance by FY2027.
Moreover, the acquisition is financially sound, with a purchase price of $675 million that does not strain the company’s balance sheet. The expected EBITDA margins from the acquisition are notably higher than CMC’s historical averages, indicating a potential for improved profitability. Additionally, the fragmented nature of the concrete product market presents further consolidation opportunities, which could bolster CMC’s market presence. These strategic moves, along with the potential for sustained higher rebar prices, support the increased price target and the Buy rating.
In another report released yesterday, Jefferies also maintained a Buy rating on the stock with a $70.00 price target.