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Investing.com -- RBC Capital Markets began coverage of Knife River Corp and Martin Marietta Material, noting difference in in margin profiles among U.S. aggregates producers as infrastructure spending continues to support the sector.
The bank rated Knife River Outperform with a $129 price target on potential for earnings growth through margin improvement.
Martin Marietta was initiated at Sector Perform with a $515 target, reflecting its already high margins.
Vulcan Materials (NYSE:VMC) and CRH (NYSE:CRH) were rated at Sector Perform and Outperform respectively.
RBC noted that while all major U.S. aggregates firms are benefiting from federally funded infrastructure programs, their positioning and profitability vary.
Knife River, which was spun out from MDU Resources in 2023, is seen as earlier in its margin expansion cycle compared to more mature peers like Martin Marietta and Vulcan.
The analysts said that firm-level differences in exposure to weather, regional gas tax funding, and the mix of construction materials influence operating results.
The note includes a breakdown of cost structures across cement, ready mix, asphalt and gypsum segments, and maps company asset locations by U.S. state.
RBC also made minor estimate changes to Cemex, CRH, Buzzi Unicem (BIT:BZU), and Vulcan.
While Martin Marietta and Vulcan remain the most widely followed names in the sector, RBC said investors may be overlooking Knife River’s potential for margin growth and CRH’s integration advantages in North America.
Heidelberg (ETR:HDDG) Materials was also cited as having underappreciated U.S. assets.
Brokerage said the June 23 market debut of Amrize, a CRH spinout, could further shift investor attention toward the sector.