BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
Investing.com - Oppenheimer lowered its price target on Builders FirstSource (NYSE:BLDR) to $155 from $165 on Thursday, while maintaining an Outperform rating on the stock. The company, currently trading at $133, has shown strong market performance with a 4.54% gain in the past week. According to InvestingPro analysis, the stock currently trades near its Fair Value, with management actively buying back shares.
The investment firm cited a weaker backdrop for single-family housing starts and expectations for a difficult competitive environment through the remainder of the year as reasons for the adjustment.
Oppenheimer characterized 2025 as a "transitional period" for the company as it manages weaker than expected single-family starts, continued margin normalization, and reduced capacity for mergers and acquisitions or share repurchases.
Despite the near-term challenges, Oppenheimer maintained its Outperform rating, noting that the long-term outlook for Builders FirstSource remains favorable.
The firm believes the company is well-positioned to benefit from a housing industry that remains underbuilt and presents opportunities for bolt-on acquisitions.
In other recent news, Builders FirstSource has announced its pricing of a $750 million senior notes offering at a 6.750% interest rate, with maturity set for 2035. The company plans to use the proceeds to repay existing debt, marking a strategic move to manage its debt portfolio effectively. Additionally, Builders FirstSource has made significant amendments to its corporate governance, including the declassification of its Board of Directors and the limitation of liability for certain officers, following strong stockholder support. In leadership changes, Gayatri Narayan has been appointed as President of Technology and Digital Solutions, bringing extensive experience from notable companies like PepsiCo (NASDAQ:PEP) and Amazon (NASDAQ:AMZN).
Furthermore, Stifel analysts have revised their price target for Builders FirstSource to $118 from $125, maintaining a Hold rating due to concerns over the company’s revised guidance and softer outlook for the second quarter of 2025. The analysts highlighted that competitive pressure on margins remains a significant factor. Despite these challenges, they recognize the company’s long-term potential and are monitoring for market improvements. Meanwhile, David Rush, former CEO of Builders FirstSource, has joined the Board of Directors of Eagle Materials (NYSE:EXP), bringing his extensive industry experience to the company.
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