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Investing.com - BofA Securities raised its price target on TopBuild Corp (NYSE:BLD) to $400 from $320 while maintaining a Buy rating following the company’s agreement to acquire Progressive Roofing. The construction products company, currently trading at $356.89 with a market capitalization of $10.1 billion, maintains a "GREAT" financial health score according to InvestingPro analysis.
TopBuild announced it will acquire Progressive Roofing in an all-cash transaction valued at $810 million. Progressive Roofing is a leader in commercial roofing installation and aftermarket services. With a current ratio of 2.02 and moderate debt levels, TopBuild appears well-positioned to finance this acquisition while maintaining financial flexibility.
The acquisition aligns with TopBuild’s previously stated intentions to enter new verticals through mergers and acquisitions to drive growth. BofA Securities noted that commercial roofing installation appears to be a strategic fit due to similar operations and the opportunity to broaden TopBuild’s building envelope offerings to commercial customers.
Progressive Roofing has high exposure to less cyclical revenue streams, with 70% of its business coming from re-roofing and maintenance, which BofA Securities characterized as non-discretionary and recurring revenue drivers.
BofA Securities’ new price target is based on 12.5x EV/2026E EBITDA, increased from the previous 10x multiple, reflecting expected deal accretion and the opportunity for TopBuild to accelerate growth through mergers and acquisitions.
In other recent news, TopBuild Corp. reported first-quarter earnings for 2025, surpassing expectations with an earnings per share (EPS) of $4.63 compared to a forecast of $4.43. The company’s revenue met expectations at $1.23 billion. In a strategic move to expand its commercial building solutions, TopBuild announced the acquisition of Progressive Roofing for $810 million in cash. This acquisition is expected to be immediately beneficial to TopBuild’s adjusted earnings per share and will provide entry into the $75 billion commercial roofing services industry.
S&P Global Ratings revised TopBuild’s recovery rating on its senior notes to ’4’ from ’3’, indicating an expectation for an average recovery of 30%-50%. The revision follows TopBuild’s refinancing activities, including a new five-year facility that consists of a $1 billion revolver, a $1 billion term loan A, and a $250 million delayed-draw term loan. This refinancing aims to support future acquisitions and general corporate purposes.
The company’s capital structure now includes a $1 billion revolving credit facility and additional senior secured loans, reflecting a robust financial strategy. Despite these developments, the issuer credit rating remains at ’BB+’ with a stable outlook, as S&P Global Ratings anticipates continued stability in TopBuild’s commercial and industrial sales.
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