Stifel initiates coverage on Trex stock with Buy rating, $61 price target

Investing.com - Stifel initiated coverage on Trex (NYSE:TREX), currently trading at $53.57 with a market capitalization of $5.7 billion, with a Buy rating and a price target of $61.00 on Wednesday.

The research firm cited the recent pressure on Trex shares as creating "an attractive entry point" that undervalues the company’s double-digit revenue growth prospects and top-tier margin profile, with InvestingPro data showing a healthy gross profit margin of 39.3%. Stifel highlighted Trex’s leadership position in the $8 billion composite decking and railing category.

Stifel believes Trex is positioned to continue driving wood conversion in a category where wood still represents 75% of the market. The firm noted that Trex pioneered the composite decking category, which has reached 25% market share, with products that compare favorably to wood alternatives on durability. InvestingPro analysis reveals the company maintains a strong return on equity of 20% and operates with a moderate debt level.

According to Stifel, Trex’s long-term prospects were validated during the COVID era when the company outperformed building products peers despite significant deflation from competing materials. The firm also pointed to Trex’s innovation and capacity investments that can support revenue at twice the current level. Get deeper insights into Trex’s valuation and growth potential with InvestingPro’s comprehensive research report, one of 1,400+ available for leading US stocks.

Stifel projects a meaningful cash flow inflection beyond FY25 that could support potential M&A or share repurchase, and does not believe the acquisition of competitor AZEK by JHX will disrupt Trex’s prospects.

In other recent news, Trex Company announced the appointment of Prithvi Gandhi as its new Chief Financial Officer, effective October 6, 2025. Gandhi brings over 25 years of financial leadership experience, having previously held senior positions at Beacon Roofing Supply and TAMKO Building Products. On the financial front, Trex’s second-quarter earnings slightly exceeded consensus expectations for revenue, EBITDA, and EPS, despite challenging weather conditions and a softening repair and remodel market. Following these earnings, Benchmark reiterated its Buy rating with an $80 price target, reflecting confidence in the company’s performance.

DA Davidson also raised its price target for Trex from $60 to $65, citing resilient sales and expanding gross margins as key factors. Truist Securities maintained its Buy rating and $75 price target, despite recent stock price fluctuations and concerns about potential price discounting. These developments highlight the continued positive outlook from analysts such as Truist Securities and Benchmark, even amid market concerns.

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