Rafe Jadrosich, an analyst from Bank of America Securities, reiterated the Buy rating on TopBuild. The associated price target was raised to $400.00.
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Rafe Jadrosich has given his Buy rating due to a combination of factors surrounding TopBuild’s strategic acquisition of Progressive Roofing. This acquisition is seen as a solid strategic fit for TopBuild, as it expands their operations into the commercial roofing installation sector, which is characterized by less cyclical and more recurring revenue streams. The deal is expected to enhance TopBuild’s building envelope offerings and provide significant growth opportunities through mergers and acquisitions in a fragmented market.
Furthermore, the acquisition is anticipated to be financially beneficial, with an estimated 4% earnings per share accretion by 2026. The purchase price is considered attractive, especially given the post-synergy valuation metrics. Additionally, the acquisition is expected to be funded efficiently through cash on hand and credit facilities, maintaining a healthy net leverage ratio. These factors collectively support the Buy rating, as the acquisition positions TopBuild for accelerated growth and diversification in a less volatile market segment.
Based on the recent corporate insider activity of 19 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BLD in relation to earlier this year.