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UBS maintained its Neutral rating and $51.00 price target on Azek Co. (NYSE:AZEK) following the announcement of its acquisition by James Hardie (NYSE:JHX). According to InvestingPro data, AZEK currently trades at $52.59, slightly above the target price, with notably high valuation multiples including a P/E ratio of 50.
James Hardie management believes Azek is currently under-penetrated at major home improvement retailers, which represent approximately 15% of Azek’s business. The acquisition is expected to help drive further retail penetration for Azek’s products.
Despite concerns about potential market slowdowns extending into 2026, James Hardie expressed confidence in its financial position. The company identified multiple liquidity options, including an Australian land sale and the ability to adjust share repurchases and capital expenditures if necessary.
James Hardie highlighted several areas for achieving synergy targets, specifically mentioning general and administrative expenses, procurement, freight costs, and lean manufacturing improvements. The company also noted recent exclusive agreements with homebuilders represent both new and expanded relationships.
According to management, James Hardie plans to gradually integrate Azek’s product offerings as potential solutions within its broader portfolio over time, leveraging the combined company’s expanded market reach.
In other recent news, The AZEK Company Inc. reported its financial results for the second quarter of fiscal year 2025, surpassing earnings expectations with an adjusted earnings per share (EPS) of $0.45, compared to the forecasted $0.43. The company’s revenue also exceeded projections, reaching $452.2 million against a forecast of $445.72 million. Additionally, AZEK’s proposed merger with James Hardie Industries has progressed as the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired, satisfying a key condition for the merger to proceed. DA Davidson analyst Kurt Yinger increased the price target on AZEK to $51.00 from $50.00, maintaining a Neutral stock rating following the company’s strong financial performance. The company has also been expanding its product offerings and distribution channels, contributing to its strong market position. In another development, RBC analysts reported a decrease in lumber and oriented strand board (OSB) prices, forecasting further declines. These recent developments highlight AZEK’s strategic growth initiatives and its potential impact on the building materials market.
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