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On Tuesday, Doman Building Materials Group Ltd (DBM:CN) (OTC: CWXZF) received a new Buy rating from TD Securities, accompanied by a price target of Cdn$9.50. The initiation of coverage comes as the company continues its expansion into treated wood products, a move that has shown varying degrees of success so far.
The analyst at TD Securities noted that despite the mixed outcomes from Doman Building Materials’ growth strategy, there are emerging signs of positive change. They emphasized the potential for the company’s multiple to increase as it demonstrates the sustainability of its margins, earnings per share (EPS), and free cash flow (FCF) post-pandemic. Additionally, the expectation is for the company’s leverage to decrease and for its recent acquisitions to start contributing positively to its performance.
The report specifically pointed out the integration of CM Tucker as a significant catalyst for Doman Building Materials. The acquisition is expected to play a key role in the company’s future growth and success.
The analyst’s statement highlighted the importance of the company proving its ability to maintain its financial track record and the benefits of its recent strategic moves. "The multiple should re-rate higher as DBM proves that its post-pandemic margin/EPS/FCF track record is sustainable, leverage declines, and recent acquisitions bear fruit," they said.
Investors and market watchers will be keeping an eye on Doman Building Materials Group as it works towards achieving the milestones laid out by TD Securities, which could lead to a reevaluation of the company’s stock value in the near future.
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