Why did Jefferies Downgrade Headwaters Inc.’s Stock?

By Ryan Adsit

Jefferies analyst Philip Ng downgraded Headwaters Inc. (NYSE: HW) to Hold today and set a price target of $24.25. The company’s shares closed last Wednesday at $23.57, close to its 52-week high of $23.87.

Ng observed:

“We are Downgrading HW to Hold after the announcement that the company will be acquired by Boral (BLD-AU) for $24.25 per share, which is currently reflected in the share price, and we believe a superior offer is unlikely.”

According to TipRanks.com, Ng is a top 100 analyst with an average return of 14.3% and a 77.3% success rate. Ng covers the Consumer Goods sector, focusing on stocks such as Orchids Paper Products Company, Graphic Packaging, and Sonoco Products.

Currently, the analyst consensus on Headwaters Inc. is Hold and the average price target is $24.28, representing a 3.0% upside.

In a report issued on November 21, Canaccord Genuity also downgraded the stock to Hold.

Headwaters Inc.’s market cap is currently $1.75B and has a P/E ratio of 34.70. The company has a book value ratio of 6.0186.

Based on the recent corporate insider activity of 16 insiders, corporate insider sentiment is neutral on the stock. Most recently, in August 2016, Bob Whisnant, the President HCM, Block Group of HW sold 32,890 shares for a total of $625,239.

Headwaters, Inc. engages in the manufacturing of building products for the residential construction residential remodeling, commercial and institutional construction industries. Its products include architectural stone, resin-based exterior siding accessories such as specialty siding and shutters; roofing, trim board, decking, railing concrete block, and various other building products. It operates through the Headwaters Building Products and Headwaters Construction Materials segments. The Headwaters Building Products segment offers siding and trimboard, architectural stone, specialty roofing and concrete block products. The Headwaters Construction Materials segment refers to the sale of fly ash in the United States. The company was founded in 1995 and is headquartered in South Jordan, UT.