Beacon Roofing Supply Downgraded to Sector Perform, Shares Down 4%

Beacon Roofing Supply (NASDAQ:BECN) was reiterated at Benchmark with a Buy rating and $140 price target. Last week, the company delivered solid fourth-quarter 2024 results, meeting analyst expectations despite facing macroeconomic headwinds and seasonal slowdowns in the latter half of the quarter.

Revenue climbed approximately 4.5% year-over-year, while adjusted EBITDA increased by 2.7%, both setting new fourth-quarter records for the company. Although the housing market remains sluggish, with single-family home construction activity subdued and existing home turnover near historic lows, Beacon Roofing Supply is still positioned for growth. Expansion through recent acquisitions and the scaling up of newly developed locations are expected to drive positive performance over the coming year.

Given the uncertain economic environment and a slower-than-anticipated start to the year, estimates have been adjusted downward by $0.50 for both the current and upcoming fiscal year. However, the long-term outlook remains optimistic, supporting the decision to maintain a Buy rating.

Beacon Roofing Supply (NASDAQ:BECN) was reiterated at Benchmark with a Buy rating and $140 price target. Last week, the company delivered solid fourth-quarter 2024 results, meeting analyst expectations despite facing macroeconomic headwinds and seasonal slowdowns in the latter half of the quarter.

Revenue climbed approximately 4.5% year-over-year, while adjusted EBITDA increased by 2.7%, both setting new fourth-quarter records for the company. Although the housing market remains sluggish, with single-family home construction activity subdued and existing home turnover near historic lows, Beacon Roofing Supply is still positioned for growth. Expansion through recent acquisitions and the scaling up of newly developed locations are expected to drive positive performance over the coming year.

Given the uncertain economic environment and a slower-than-anticipated start to the year, estimates have been adjusted downward by $0.50 for both the current and upcoming fiscal year. However, the long-term outlook remains optimistic, supporting the decision to maintain a Buy rating.

Beacon Roofing Supply, Inc. (NASDAQ:BECN) was downgraded to sector perform from outperform by RBC Capital analysts. Also, the price target was lowered to $58 from $70. Shares were trading around 4% lower Wednesday afternoon.

The analysts keep their 2022 EBITDA estimate largely unchanged at $829 million (previously $832 million) while lowering their 2023 EBITDA estimate more meaningfully to $664 million from $775 million, as they model a decline in volumes, price give-back amid likely increased competition and further gross margin normalization.

The analysts reduced their 2023 revenue estimate to $7.46 billion (down 8.5% year-over-year) from $7.88 billion (down 4% year-over-year). Despite noting that they continue to like the company’s self-help initiatives, improved balance sheet, and relatively more defensive product portfolio, the analysts downgrade the company to sector perform following the stock’s year-to-date relative outperformance given their expectation for deteriorating macro housing conditions to weigh on 2023 earnings.

Beacon Roofing Supply, Inc. (NASDAQ:BECN) reported its Q4 results last week, with EPS coming in at $1.53, beating the consensus estimate of $1.50. However, the company’s shares have declined around 10% in the last two weeks as the company begins lapping significantly tougher volume/margin comps. Nevertheless, these headwinds were already well flagged, and management effectively assuaged any concerns of sharp margin reversal next year. Moreover, given residential shingles manufacturers are experiencing significant asphalt inflation, the analysts at Berenberg Bank think that additional vendor price announcements will take place next year.

Beacon Roofing Supply, Inc. (NASDAQ:BECN) reported its Q4 results last week, with EPS coming in at $1.53, beating the consensus estimate of $1.50. However, the company’s shares have declined around 10% in the last two weeks as the company begins lapping significantly tougher volume/margin comps. Nevertheless, these headwinds were already well flagged, and management effectively assuaged any concerns of sharp margin reversal next year. Moreover, given residential shingles manufacturers are experiencing significant asphalt inflation, the analysts at Berenberg Bank think that additional vendor price announcements will take place next year.