James Hardie stock initiated with Buy rating at Jefferies on growth potential

Investing.com - Jefferies has initiated coverage on James Hardie Industries (NYSE:JHX) with a Buy rating and a price target of $34.00 on Friday. The company, currently trading at $27.71 with a market capitalization of $16.2 billion, shows strong financial health according to InvestingPro metrics.

The research firm views James Hardie as a "rare secular growth story" driven by material conversion, with leading market positions in well-structured industries that enable the company to consistently outgrow the market and implement price increases. With a healthy gross profit margin of 38.8% and a current ratio of 2.1, InvestingPro data reveals the company’s solid operational efficiency and strong liquidity position.

Jefferies highlighted the company’s acquisition of Azek as a potential catalyst that could accelerate growth and lead to a higher valuation for the stock.

The firm also noted that James Hardie’s primary stock listing has moved to the New York Stock Exchange, which could contribute to the anticipated re-rating.

James Hardie Industries specializes in fiber cement building products and has established itself as a leader in several key markets within the building materials sector.

In other recent news, James Hardie Industries has reported several significant developments. The company announced that AZEK stockholders have overwhelmingly approved the merger with James Hardie, with 99.96% of votes cast in favor. This merger is expected to influence James Hardie’s financials, with Macquarie upgrading its stock rating to Outperform, citing synergies and a projected net debt to EBITDA of 3.3x by fiscal year 2026. William Blair also initiated coverage on James Hardie with an outperform rating, highlighting the company’s strong market positions in siding and composite decking. Truist Securities maintained its Buy rating, noting the ongoing developments in the AZEK acquisition, including financing details and the cancellation of American Depositary Receipts. Additionally, James Hardie has secured a strategic three-year agreement with Pahlisch Homes to supply siding and trim for new home developments, setting a standard for Pahlisch’s projects in the Pacific Northwest and Northern Rockies. These developments illustrate James Hardie’s active engagement in strategic partnerships and market expansion.

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