James Hardie initiated with an Outperform at William Blair

William Blair initiated coverage of James Hardie (JHX) with an Outperform rating. The company is the leader in the “fast-growing” siding and composite decking categories. James Hardie is a leading manufacturer of stylish, low-maintenance, and durable fiber cement siding and composite decking, railing, and trim, serving a $23B North American market, the analyst tells investors in a research note. The firm says the company’s portfolio of brands is well recognized, with number one or two positions. Blair believes buying Azek (AZEK) will create one of the fastest-growing and highest-margin building products franchises, with secular growth from material conversion. It says 10%-12% sales growth and 12%-15% EBITDA growth are achievable long term. The firm sees over 30% upside in the shares to $33.