On Thursday, Barclays updated its assessment of Trex Company Inc. (NYSE:TREX), a leading manufacturer of wood-alternative decking products. The firm raised its price target on the company's stock to $93 from the previous $86 while maintaining an underweight rating on the shares.
The adjustment reflects a new valuation multiple of 27.0 times the fiscal year 2024 EBITDA estimate, which is an increase from the earlier multiple of 25.0 times. Barclays' analyst cites increased confidence in the long-term growth of the decking market, which has shown recent resiliency, particularly in the repair and remodeling (R&R) sector.
The forecast for Trex's fiscal year 2024 includes an EBITDA estimate of $371 million. The price target is also based on an expected year-end 2024 net cash position of $49 million for the company.
The underweight rating indicates that Barclays' view on Trex stock is less optimistic relative to other stocks in the sector. This rating suggests that the firm expects Trex to underperform the broader market or its industry peers over a certain period.
Investors and market watchers often look to such updates from financial institutions to gauge the market sentiment and potential future performance of stocks. Barclays' latest price target revision for Trex provides a nuanced outlook, acknowledging the company's market position while signaling caution for the stock compared to its competitors.
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