- Barclays analyst Matthew Bouley lowered the price target for Trex Company Inc (NYSE:TREX) to $53 (a downside of 2.7%) from $63 while maintaining the Equal Weight ratings on the shares.
- The analyst stated that while de-stocking was anticipated by investors following AZEK Company Inc. (NYSE:AZEK) report, the magnitude of the impact on TREX's sales in 2022 with subsequent gross margin pressure and uncertainty around 1H'23 recovery is altogether simply greater than anticipated.
- Also Read: Azek Gets Mixed Reactions From Analysts On Q3 Results
- Bouley expects early 2023 volumes to see pressure y/y as early 2022 still saw channel infill.
- Bouley anticipates that TREX will continue to take steps to flex costs down and expect a greater focus on COGs reductions which does support improving gross margin % in 4Q and into 2023.
- Stephens analyst Trey Grooms lowered the price target for Trex to $65 (an upside of 19%) from $90 while maintaining the Overweight rating on the shares.
- The analyst mentions that it's no secret that destocking was taking place, but admittedly, the expected magnitude is surprising and significantly more than expected.
- The lowered guidance assumes channel inventory is fully reset at minimal levels, as well as reduced sell-through demand, he adds.
- Grooms states that while the next few quarters will be challenged, the bar is now reset, and he feels that a near worst-case scenario for the medium term is likely out on the table.
- DA Davidson analyst Kurt Yinger lowered the price target on Trex to $58 from $67 while maintaining the Neutral rating on the shares.
- The analyst states that the company's Q2 results were "strong." Still, its second-half revenue guidance was 44% below consensus, reflecting the similar channel destocking headwinds.
- Yinger notes that while the cost reduction initiatives announced by Trex are positive as volumes recover, the company's visibility is challenged.
- Stifel analyst Stanley Elliott lowered the price target on Trex to $68 from $77 while maintaining the Buy rating on the shares.
- The analyst states that the second half guidance was lowered due to channel destocking and lower-end market demand.
- Truist analyst Keith Hughes lowered the price target on Trex to $85 (an upside of 56%) from $90 while maintaining the Buy rating on the shares.
- Price Action: TREX shares are trading lower by 14.66% at $54.47 on the last check Tuesday.
