Trex Company: Strong Market Position and Promising Growth Outlook Justify Buy Rating

Analyst Ketan Mamtora from BMO Capital maintained a Buy rating on Trex Company (TREX – Research Report) and keeping the price target at $72.00.

Ketan Mamtora has given his Buy rating due to a combination of factors that highlight Trex Company’s promising outlook. The company is experiencing a resurgence in activity after a slow start to 2025, with a focus on achieving a 5-7% growth in sell-through and an adjusted EBITDA margin exceeding 31%. The premium segment of the market is performing well, and there is a gradual improvement in entry-level demand. Additionally, Trex is expected to benefit from a reversal of costs related to entry-level product retooling and lower production in the first half of 2025, alongside a significant reduction in capital expenditures, which will enhance free cash flow.
Ketan Mamtora also points to Trex’s strong market position in composite decking and the potential for material conversion from wood as key advantages. The company’s valuation is considered very attractive, trading at 17.7 times the estimated 2025 EBITDA. Furthermore, Trex’s balance sheet is robust, with a net leverage of 1.3x, and the completion of the Arkansas facility is anticipated to reduce capital expenditures significantly in 2026, further supporting free cash flow and potential share repurchases. These factors collectively contribute to the Buy rating for Trex Company.

In another report released today, Benchmark Co. also reiterated a Buy rating on the stock with a $80.00 price target.