Analyst Rafe Jadrosich of Bank of America Securities reiterated a Buy rating on Trex Company (TREX – Research Report), reducing the price target to $79.00.
Rafe Jadrosich has given his Buy rating due to a combination of factors that highlight Trex Company’s strong positioning and growth potential. The company reported better-than-expected fourth-quarter earnings, driven by increased revenue and operating margins. Additionally, Trex’s guidance for 2025 aligns with previous expectations, maintaining a robust EBITDA margin of over 31%. Despite a slight reduction in projected EBITDA for 2025 and 2026 due to conservative revenue assumptions, the stock remains attractive as it trades near the low end of its historical EV/EBITDA multiple relative to peers.
Trex is also well-positioned for future growth, particularly with its expansion in the railing market. The company plans to double its market share in this $3.3 billion market over the next five years through new product launches and strategic distribution partnerships. Furthermore, Trex’s capital investments, particularly in its Little Rock facility, are progressing well, with start-up costs lower than anticipated. This, combined with expected declines in capital expenditures post-2025, should bolster free cash flow and enable additional capital returns to shareholders.