Loop Capital Reiterates Hold Rating on Trex (TREX)

Loop Capital analyst Jeffrey Stevenson reiterated a Hold rating and $72.00 price target on Trex (NYSE: TREX).

The analyst commented: "TREX reported better-than-expected 3Q24 results which was driven by less severe revenue declines than our in-line forecast. Sell through demand declined LSD during the quarter as the company's premium product categories reported HSD sell through growth (+LDD in 2Q24) which partially offset declines in low- and mid-end categories. TREX maintained its FY24 revenue guidance of $1.14B at the midpoint despite 4Q24 sell through demand expectations coming in ahead of prior expectations (Down LSD vs. Down HSD previously) since the company is working to bring down channel inventories below last year's levels. Moving forward, TREX will be facing a challenging 1H25 comp against this year's elevated early buy and healthy sell through demand environment. The company is not expecting $40M of last year's early buy to repeat as it looks change its approach to channel load in to mitigate the risk of boom and bust cycles. Lastly, TREX expects FY25 EBITDA margin to be 31% or higher which includes $10M one-time costs for TREX's railing transition and new Little Rock, AR plant. While there are still questions surrounding its FY25 margin expectations (Ex. volume assumptions), we were encouraged that the company believes it can still see modest margin expansion next year despite elevated CapEx associated with its new Little Rock plant. That said, we are maintaining our Hold rating and $72 PT pending improved visibility into FY25 sell through demand given the company's challenging 1H25 comp."

For an analyst ratings summary and ratings history on Trex click here. For more ratings news on Trex click here.

Shares of Trex closed at $66.51 yesterday.

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