James Hardie stock initiated at outperform by William Blair

Investing.com - William Blair initiated coverage on James Hardie Industries (NYSE:JHX) with an outperform rating on Friday. According to InvestingPro data, the company maintains a GOOD financial health score, with strong profitability metrics including a 38.8% gross margin and healthy returns on equity of 21%.

The research firm cited James Hardie’s leadership position in the fast-growing siding and composite decking categories, serving a $23 billion North American market. William Blair noted the company’s portfolio of brands is well recognized, with number one or number two positions across siding (67% of sales), decking and railing (20%), trim exteriors (7%), and interiors (5%). InvestingPro analysis reveals the company operates with moderate debt levels and maintains strong liquidity, with current assets more than double its short-term obligations.

William Blair highlighted that James Hardie’s acquisition of AZEK will create one of the fastest-growing and highest-margin building products franchises, with secular growth from material conversion. The firm believes 10%-12% sales growth and 12%-15% EBITDA growth are achievable long term.

The research firm projects over 30% upside potential for James Hardie stock, with a price target of $33. This target is based on a multiple of 10.5 times calendar 2027 EBITDA of $2 billion.

James Hardie manufactures stylish, low-maintenance, and durable fiber cement siding and composite decking, railing, and trim products, according to William Blair’s analysis.

In other recent news, James Hardie Industries has been actively involved in several significant developments. The company is in the process of acquiring AZEK, with analysts from Truist Securities maintaining a Buy rating and a price target of $35.00, despite some uncertainties posed by reviews from proxy firms. Additionally, James Hardie has secured a strategic three-year agreement with Pahlisch Homes to supply siding and trim for new home developments in the Pacific Northwest and Northern Rockies, marking a notable expansion in their market presence.

Meanwhile, Citi has adjusted its price target for James Hardie to AUD41.50, maintaining a Neutral rating due to challenges in the company’s fourth-quarter performance and execution missteps. Truist Securities also revised its price target to $35.00, noting the company’s forecast for slight growth in 2025 amidst a challenging environment. BofA Securities, however, continues to maintain a Buy rating with a $28.00 price target, projecting a 6% EBITDA growth for fiscal year 2026 and highlighting a potential return opportunity despite a recent stock drop.

These recent developments underscore James Hardie’s strategic maneuvers and the varied analyst perspectives on its financial outlook.

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