Azek stock price target raised to $62 at Wolfe Research

On Wednesday, Wolfe Research demonstrated confidence in Azek Co. (NYSE: AZEK), raising the price target for the company’s shares from $60.00 to $62.00, while reiterating an Outperform rating. The stock, currently trading at $50.23, has shown strong momentum with a 27% return over the past year, though InvestingPro data indicates relatively high volatility with a beta of 1.95. The move follows Azek’s strong performance in the first quarter, where the company’s Residential Revenue growth reached 22%, surpassing the top end of management’s guided range of 13%. According to InvestingPro data, the company maintains solid financial health with a current ratio of 2.17 and operates with a moderate debt level, as evidenced by its debt-to-equity ratio of 0.41.

The analysts at Wolfe Research noted that the expectations were high for the quarter, as investors anticipated that conservative guidance would lead to a beat-and-raise scenario throughout 2025, starting with the first quarter. Azek’s recent financial results confirmed these expectations, with the company meeting the elevated forecasts.

Wolfe Research acknowledged some positive factors contributing to the quarter’s success, such as load-in and channel inventory tailwinds. The firm also highlighted that sell-through rates improved by double digits, maintaining the strong pace set in October and showing no signs of deceleration.

Looking ahead, Wolfe Research believes that Azek’s outlook remains promising, with guidance for the second through fourth quarters appearing conservative. This suggests that the beat-and-raise pattern is likely to continue. The broader analyst community shares this optimistic view, with a consensus recommendation of 1.74 (where 1 is Strong Buy) and price targets ranging from $41.90 to $64.00. Discover more detailed analysis and 11 additional key insights about AZEK with an InvestingPro subscription, including exclusive Fair Value calculations and comprehensive financial health scores. The firm also expressed a positive outlook for the Decking category, which is expected to be the only Building Products category to show material volume growth in 2025.

In their commentary, the analysts stated, "We believe the AZEK story is very much intact with 2Q-4Q guidance also looking conservative and the beat-and-raise scenario remaining in play moving forward. We continue believing Decking is likely the only Building Products category we cover showing material volume growth in 2025 with AZEK initiatives driving further share wins."

The upgrade in the price target to $62 reflects Wolfe Research’s belief in Azek’s potential for continued success and market share gains within the Building Products industry. The company has demonstrated strong fundamentals with a gross profit margin of 37.61% and a return on equity of 11%, though current market valuations appear stretched according to InvestingPro’s Fair Value analysis.

In other recent news, Benchmark named HLMN as its top pick for FY25, citing a favorable environment for new single-family home construction. Meanwhile, AZEK announced executive leadership changes with Ryan Lada stepping up as Senior Vice President, Chief Financial Officer, and Treasurer, and Matthew Wiora taking on the role of Chief Accounting Officer.

In addition, Citi upgraded AZEK’s stock rating from Neutral to Buy, adjusting the price target to $60 from the previous $51. This follows AZEK’s announcement of revisions to its executive severance plan, aligning with industry standards for executive compensation.

Furthermore, RBC Capital Markets raised its target for AZEK shares to $58 from $50, reiterating an Outperform rating on the stock. These developments reflect recent changes in the housing and building products sector, and the strategic moves by HLMN and AZEK in response to these market dynamics.

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