Goldman Sachs started shares of Trex Company Inc (NYSE:TREX) at Buy with a $78 per share price target on Tuesday, stating the company has an "industry-leading position."
Analysts believe that Trex company specifics suggest a favorable risk/reward for the stock.
"In our view, Trex is well positioned to leverage favorable secular shifts along with company-specific initiatives to drive growth and profitability ahead of our broader building products coverage," said the analysts.
The analysts believe the company has best-in-class recycling capabilities that enable higher margins.
"The company's decks are comprised of 95% reclaimed content, resulting in a lower and more stable cost structure. As its manufacturing process improves, we see an ability to process dirtier and cheaper materials, contributing to gains in profitability ahead of peers," they added.
They also pointed to other positive factors, such as efforts to grow through new product introductions and its ability to leverage the industry's most recognized brand name.