Builders Firstsource Gets a Buy Rating from FBR Capital

By Ryan Adsit

In a report released today, Alex Rygiel from FBR Capital reiterated a Buy rating on Builders Firstsource (NASDAQ: BLDR), with a price target of $20. The company’s shares opened today at $14.89.

Rygiel observed:

“We are reiterating BLDR as our Alpha Generator idea heading into 2Q earnings, with 35% potential upside to our $20 price target. We expect meaningful stock price appreciation over the coming years as demand for new single family homes and for lumber and other building materials should grow and as the company pursues a significant deleveraging strategy. We are adjusting our estimates for 2017 and 2018 to account for solid 1Q17 results, recent lumber prices and our expectation for continued strength through 2Q and into 2H17. Circling back, sales, EBITDA and EPS for 1Q17 were nicely ahead of our and consensus expectations. In particular, sales growth of 10% reconfirmed our confidence in the company’s initiatives to reinvigorate growth. Looking into 2Q, there will be some noise created by the short-term movement in lumber prices, which net-net should not be a concern. More importantly, BLDR continues to make favorable strides towards de-leveraging the balance sheet, which should, over time, be a significant catalyst to increasing shareholder value. In addition, management’s recent pivot toward growth (versus integration), through an initiative to expand its sales force, could provide upside in 2H17 and into 2018.”

According to TipRanks.com, Rygiel is a 5-star analyst with an average return of 15.1% and a 71.3% success rate. Rygiel covers the Basic Materials sector, focusing on stocks such as Granite Construction Inc, Jacobs Engineering, and Tutor Perini Corp.

Currently, the analyst consensus on Builders Firstsource is Strong Buy and the average price target is $20, representing a 34.3% upside.

In a report issued on June 16, Stifel Nicolaus also reiterated a Buy rating on the stock with a $20 price target.

The company has a one year high of $16.50 and a one year low of $9.04. Currently, Builders Firstsource has an average volume of 1.16M.

Based on the recent corporate insider activity of 35 insiders, corporate insider sentiment is neutral on the stock. Last month, Morris Tolly, the Sr VP-Operations of BLDR sold 50,268 shares for a total of $744,469.

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Builers FirstSource, Inc. engages in the supply and manufacture of building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers. It operates through the following segments: Northeast, Southeast, South, and West.