As previously reported, Stephens analyst Trey Grooms upgraded Arcosa to Overweight from Equal Weight with an unchanged price target of $96. In addition to having recently delivered “solid” Q2 results and narrowed 2024 guidance, the company announced a number of “meaningful” portfolio actions, including plans to divest Steel Components and other underperforming assets in Q3 and acquire Stavola, a high-margin aggregates and asphalt company in Q4, the analyst tells investors. Since its spinoff, Arcosa has increased their mix of business towards aggregates and increased infrastructure exposure and this transaction accelerates that strategy, which should translate into margin expansion immediately and multiple expansion over time, the analyst added.
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