UBS maintains Owens Corning stock Buy rating, $218 target

On Thursday, UBS reiterated its Buy rating and $218.00 price target for Owens Corning (NYSE:OC), following the company’s announcement of its 2028 financial targets. With current revenue of $11.49 billion and a strong EBITDA of $2.6 billion, Owens Corning aims to achieve $12.5 billion in revenue, exceeding UBS estimates of $11.6 billion. The company’s revenue goal is underpinned by market outperformance, expected to be fueled by capacity additions, secular trends, and favorable price/mix dynamics. According to InvestingPro analysis, the company maintains a robust financial health score of "GOOD," supported by strong profitability metrics.

Owens Corning anticipates enterprise EBITDA margins in the mid-20% range, with the Roofing segment targeting an average long-term EBITDA margin of approximately 30% and the Insulation segment aiming for around 24%. The company also raised its synergy target for the Doors acquisition from $125 million to approximately $200 million and unveiled a new share buyback program. This program allows for the repurchase of up to 12 million shares, which, combined with the 5.7 million shares remaining from the current authorization, could represent a total buyback of roughly 21% of shares outstanding. InvestingPro data shows management has been consistently shareholder-friendly, maintaining dividend payments for 12 consecutive years with a current yield of 1.94%.

The company is committed to returning about $2 billion to shareholders in 2025 and 2026 through share repurchases and dividends, a plan that surpasses UBS’s projection of $1.57 billion. Owens Corning also highlighted the stability of its business model, noting that only about 15% of its total revenue is tied to North American residential new construction. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels, with additional ProTips and detailed valuation metrics available to subscribers.

In the Roofing segment, Owens Corning continues to invest in laminate shingle capacity, which accounts for approximately 95% of demand. The majority of the company’s shingle volume is generated through the Owens Corning Contractor Network (OCCN). The firm also addressed the US housing market, suggesting that it is currently underbuilt by 2 to 4 million units, which presents an opportunity for growth in the industry. The company’s strong market position is reflected in its healthy financials, with a current ratio of 1.44 and an Altman Z-Score of 3.77, indicating solid financial stability.

Owens Corning has identified product quality as a key factor in customer decision-making for interior doors, which could lead to pricing opportunities in the Doors segment over the long term. The company estimates its total addressable market at approximately $95 billion, with the Doors acquisition adding about $30 billion to this market potential, positioning Owens Corning with an estimated market share of around 11%.

In other recent news, Owens Corning reported its Q1 2025 earnings, surpassing analyst expectations with an EPS of $2.97 compared to the forecast of $2.91, and revenue of $2.53 billion, exceeding the anticipated $2.51 billion. The company also announced the expansion of its share repurchase program, authorizing the buyback of up to 12 million additional shares, signifying its strong cash flow and commitment to shareholder value. During its 2025 Investor Day, Owens Corning outlined its strategic focus on building products, particularly in roofing, insulation, and doors, following its acquisition of Masonite. Despite these positive developments, Benchmark has maintained a Hold rating on the stock, reflecting a cautious approach until Owens Corning demonstrates its ability to achieve its strategic goals in varying market conditions. Jefferies analyst Philip Ng adjusted the price target for Owens Corning to $172 from $185, maintaining a Buy rating, citing manageable financial impacts from market dynamics in the insulation sector. Evercore ISI also revised its price target for Owens Corning to $160 from $185, keeping an In Line rating, acknowledging the company’s alignment with revenue expectations and better-than-expected earnings. These developments come amid Owens Corning’s efforts to navigate market challenges, including tariffs affecting its Doors and Insulation segments, while continuing to invest in strategic expansions and innovations.

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