Evercore ISI lifts Owens Corning target to $185, keeps In Line rating

On Thursday, Evercore ISI adjusted its financial outlook for Owens Corning (NYSE:OC), a company specializing in insulation, roofing, and fiberglass composites. The firm’s analyst increased the price target on the company’s stock to $185.00, up from the previous $180.00, while maintaining an In Line rating. This adjustment reflects a refined estimate of the company’s sales in its Roofing segment and a reevaluation of corporate expenses. According to InvestingPro data, the stock currently trades at $147.37, with analyst targets ranging from $161 to $235, suggesting potential upside. The company maintains strong fundamentals with an overall Financial Health score rated as "GOOD."

The analyst at Evercore ISI noted that the revised sales estimates for Roofing were made to account for the reallocation of businesses from the Composites segment. This reallocation is expected to add approximately $130 million in sales in the first quarter of 2025, with an estimated total of around $535 million for the full year. The adjustment was partly offset by an increase in the projected corporate expenses following a clarification from Owens Corning’s management. The company has demonstrated solid performance with revenue of $11 billion in the last twelve months and a healthy gross profit margin of nearly 30%. InvestingPro analysis reveals 12 additional key insights about the company’s performance and outlook.

Management had clarified that the forecasted corporate expense guidance for fiscal year 2025, ranging from $240 million to $260 million, was meant to be understood as an EBITDA impact rather than EBIT, as initially assumed by analysts. Consequently, the corporate expense burden on the EBIT line for fiscal year 2025 is now projected to be $337 million, higher than the previously modeled $240 million. The increase is largely attributed to expenses related to the GR business that will not be categorized under discontinued operations.

Looking ahead to fiscal year 2026, Evercore ISI anticipates that the corporate expense will decrease post-sale completion, projecting a figure of $275 million compared to the $337 million expected for the previous year. However, some costs are presumed to persist.

These revised estimates have led to an increase in the projected earnings per share (EPS) for Owens Corning. The firm now forecasts an EPS of $14.80 for fiscal year 2025, up from the earlier estimate of $14.39, and an EPS of $15.80 for fiscal year 2026, an increase from the prior estimate of $15.20. The new price target of $185 is based on a multiple of 12.5 times the forward twelve-month EPS estimate of $14.80.

In other recent news, Owens Corning has reported its fourth-quarter 2024 earnings, exceeding analyst expectations with an adjusted EPS of $3.22, surpassing the forecasted $2.90. The company also posted revenue of $2.84 billion, outperforming the projected $2.78 billion, marking a 23% year-over-year growth for the quarter. Despite these positive results, Benchmark analysts have maintained a Hold rating on Owens Corning, citing stable end market conditions and adjusting their EPS estimates downwards by $2.00 for the current and following year. RBC Capital Markets, while maintaining an Outperform rating, has revised its price target for Owens Corning from $224.00 to $212.00, reflecting a 6% lower EPS forecast for fiscal year 2025. This adjustment is due to the transition of the Glass Reinforcements business to discontinued operations and ongoing challenges in the Doors segment. In leadership changes, Owens Corning has promoted Gina Beredo to Executive Vice President, Chief Administrative Officer, and General Counsel, highlighting her role in strategic acquisitions and divestitures. These developments reflect Owens Corning’s ongoing efforts to navigate market challenges while focusing on strategic growth and leadership excellence.

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