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Investing.com - Macquarie upgraded James Hardie Industries (NYSE:JHX) from Neutral to Outperform on Monday, raising its price target to $46.80 per share. According to InvestingPro data, the company maintains strong financial health with a "GOOD" overall score, supported by robust cash flows and profitable operations, with a market capitalization of $15.8 billion.
The upgrade comes as Macquarie acknowledges the building materials company’s debt position while expecting net debt to EBITDA of 3.3x in fiscal year 2026, affected by three quarters of AZEK contribution. Current financial metrics from InvestingPro show the company operates with a moderate debt-to-equity ratio of 0.56 and maintains healthy liquidity with a current ratio of 2.1.
Despite this elevated leverage in a challenging market environment, Macquarie forecasts rapid deleveraging to 2.4x in FY27 and 1.6x in FY28, even while factoring in share buybacks of $250 million in each of FY26 and FY27.
Macquarie notes that James Hardie stock has experienced a material derating, partly due to return dilution resulting from the AZEK acquisition, but highlights that the approximately 30% discount to U.S. peer TREX "could come into sharper focus in time."
The firm has adjusted its sum-of-the-parts valuation to mid-cycle EV/EBIT multiples of approximately 16x, which it considers fair given the current point in the cycle and the emerging synergy potential from the AZEK integration.
In other recent news, The AZEK Company Inc. has received overwhelming approval from its stockholders for a merger with James Hardie Industries. Approximately 99.96% of votes were in favor, representing about 75.78% of AZEK’s total outstanding shares. Additionally, James Hardie Industries has been the subject of analyst evaluations. William Blair initiated coverage with an outperform rating, citing the company’s strong market position in siding and composite decking. Meanwhile, Truist Securities maintained a Buy rating, expressing optimism about the AZEK acquisition despite potential uncertainties from proxy reviews.
In contrast, Citi analysts adjusted their price target for James Hardie, maintaining a Neutral rating. They noted the company’s recent challenges in market share growth and product mix. Furthermore, James Hardie secured a strategic three-year agreement with Pahlisch Homes to supply siding and trim for new developments in the Pacific Northwest and Northern Rockies. This partnership aims to standardize James Hardie’s products in Pahlisch’s residential projects, reflecting a commitment to quality and long-term value. These developments highlight significant movements and evaluations surrounding James Hardie Industries.
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