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Baird initiated coverage of QXO Inc (NASDAQ:QXO) on Thursday with an outperform rating and a $32.00 price target. The stock, which has shown strong momentum with a 19% gain in the past week, currently trades at $19.95. According to InvestingPro data, analysts’ targets range from $27 to $44.
The research firm cited QXO management’s "proven, repeatable playbook across multiple public companies and industries," which Baird expects will lead to significant value creation and share outperformance.
Baird highlighted that QXO’s transformation strategy includes plans to organically double Beacon’s adjusted EBITDA, significantly expand margins, and consolidate the fragmented building products market through accretive mergers and acquisitions.
The firm acknowledged that QXO’s current valuation represents a premium based on near-term estimates but noted the shares appear "more reasonably valued given the significant expected growth/margin expansion medium/longer term."
Baird’s analysis specifically referenced QXO management’s track record of success, which forms the basis for its positive outlook on the company’s future performance in the building products sector. InvestingPro subscribers can access 12 additional investment tips and detailed financial metrics to better evaluate QXO’s growth potential.
In other recent news, QXO Inc. has announced concurrent public offerings of common stock and depositary shares, aiming to raise $1 billion, with an option for an additional $150 million to cover over-allotments. The proceeds are intended to repay debts and support potential future acquisitions. This move aligns with QXO’s strategy to expand in the building products distribution industry, aiming for $50 billion in annual revenue over the next decade. Additionally, QXO has filed a prospectus supplement with the SEC for the resale of over 67 million shares of its common stock by certain stockholders.
In a strategic acquisition, QXO recently acquired Beacon Roofing Supply (NASDAQ:BECN), a move praised by Oppenheimer, which initiated coverage with an Outperform rating and a $27 price target. The acquisition is seen as a strong foundation for QXO’s growth ambitions, with plans to double Beacon’s adjusted EBITDA to $2 billion by 2030. Wolfe Research also initiated coverage with an Outperform rating and a $44 price target, citing QXO’s potential for significant EBITDA growth through operational improvements and strategic mergers. Meanwhile, QXO has integrated with Roofr to offer real-time pricing for contractors, streamlining workflows and enhancing service offerings.
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