Rafe Jadrosich, an analyst from Bank of America Securities, reiterated the Buy rating on TopBuild (BLD – Research Report). The associated price target was lowered to $372.00.
Rafe Jadrosich’s rating is based on several key factors that contribute to a positive outlook for TopBuild’s stock. Despite the company’s 2025 adjusted EBITDA guidance falling below consensus expectations, Jadrosich sees potential in TopBuild’s market share gains and prudent capital management strategies. The company’s ability to slightly exceed consensus EPS in the fourth quarter of 2024, despite weaker revenue, also supports the Buy rating.
Jadrosich acknowledges the challenges posed by a weaker macroeconomic environment and pricing pressures, which are expected to impact TopBuild’s top line in 2025. However, he highlights the company’s strategic focus on distribution revenue growth, driven by higher M&A carryover and exposure to commercial and industrial sectors, as a positive factor. While elevated decrementals are anticipated due to lower volumes and market conditions, TopBuild’s management is taking steps to retain top-performing labor, which could mitigate some of the negative impacts. Overall, Jadrosich believes that TopBuild’s long-term growth prospects and strategic initiatives justify a Buy rating, with a price objective of $372.