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Investing.com - Wells Fargo initiated coverage on Builders FirstSource (NYSE:BLDR) with an Equal Weight rating and a price target of $115.00 on Monday, representing about 11% upside from the current price of $103.44.
The firm views Builders FirstSource as a high-quality distributor with leverage to potential housing start recovery, but cites near-term start volatility and margin risks as reasons for its neutral stance. This assessment comes as BLDR’s stock has declined over 41% in the past year, with technical indicators from InvestingPro showing the stock is currently in oversold territory.
Wells Fargo analyst Ryan MacWilliams highlighted BLDR’s position as the largest product and component distributor in new home construction, with projected 2026 revenues of $15 billion representing only about 3% market share. The company currently generates $15.65 billion in revenue (last twelve months) and maintains a robust gross profit margin of 30.97%.
The analyst noted that BLDR offers investors "the best of both worlds" with exposure to housing recovery without the risks associated with homebuilders such as land costs and incentive-related profit and loss concerns.
Wells Fargo acknowledged ongoing debate about commoditization in BLDR’s product mix but aligned with the view that value-added products have helped maintain gross margin percentages through market cycles.
In other recent news, Builders FirstSource reported its third-quarter 2025 earnings, surpassing expectations with an adjusted earnings per share (EPS) of $1.88, compared to the forecasted $1.58. Revenue also exceeded predictions, reaching $3.94 billion against a forecast of $3.84 billion. These results highlight the company’s strong performance in the recent quarter. Meanwhile, Jefferies adjusted its price target for Builders FirstSource, lowering it from $146 to $138, while maintaining a Buy rating. The research firm noted that despite competitive market conditions, the company’s margins have recently stabilized. These developments provide investors with insights into Builders FirstSource’s current financial health and market position.
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