On Thursday, Benchmark upgraded the shares price target for Trex Company, Inc. (NYSE:TREX), a leading manufacturer of wood-alternative decking products, to $105 from the previous target of $85, while maintaining a Buy rating on the stock.
The adjustment follows Trex's recent financial performance which included solid fourth-quarter results for 2023. The company's revenue, earnings before interest, taxes, depreciation, and amortization (EBITDA), and earnings per share (EPS) all slightly exceeded consensus estimates.
Earlier in the week, Trex provided guidance for the first quarter of sales that surpassed consensus estimates. This positive outlook is supported by steady mid-single-digit sell-through and the expectation that distribution channels will restock in preparation for a robust building season.
The company's full-year 2024 forecast also modestly outpaces consensus, indicating a potential for further upside if the channel restocking trend continues into the spring.
Despite the optimistic sales guidance, Benchmark has made slight adjustments to Trex's EPS estimates. The firm now projects an EPS of $2.20 for this year and $2.50 for the next year, a slight decrease from the previous estimates of $2.25 and $2.65, respectively. The rationale behind this adjustment was not elaborated upon in the provided context.
The revised price target of $105 reflects Benchmark's confidence in Trex's market position and its ability to capitalize on the upcoming building season. The analyst's commentary suggests that the channel's restocking activities, combined with consistent sell-through rates, could lead to further financial success for the company.
Investors and market watchers will likely monitor Trex's performance in the coming months, as the company strives to meet the expectations set forth in its first-quarter guidance and capitalize on the momentum heading into the building season. The raised price target is a signal of the firm's belief in the strength of Trex's business model and market demand for its products.
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