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Analyst firms reacted to Azek Company Inc's (NYSE: AZEK) Investor Day.
Baird analyst Timothy Wojs lowered the price target on Azek to $28 (an upside of 77%) from $30 while maintaining the Outperform rating on the shares.
Wojs stated that he remains a long-term buyer of the shares after management sketched bullish five-year growth and margin targets.
Wojs feels the shares are appealing in the long run due to secular drivers against valuation compression. Meanwhile, he added cyclical sentiment headwinds might keep the shares more range-bound in the near term.
Truist Securities analyst Keith Hughes reduced the price target to $30 (an upside of 90%) from $34 while maintaining the Buy on the shares.
Stifel analyst Stanley Elliott lowered the price target to $27 (an upside of 71%) from $30 while maintaining the Buy on the shares.
JP Morgan analyst Michael Rehaut decreased the price target to $27 (an upside of 71%) from $30 while maintaining the Overweight on the shares.
Barclays analyst Matthew Bouley lowered AZEK's price target to $29 (an upside of 83%) from $30 while maintaining the Overweight rating on the shares.
Bouley says that the long-term investors will gravitate towards AZEK's exciting penetration opportunity and sustainability angle, even as earnings revisions cloud the near term. However, in Barclay's view, AZEK should outgrow the market in all cases.
BMO Capital analyst Ketan Mamtora maintains Outperform ratings with a price target of $33 for AZEK.
The analyst states that macro uncertainty could impact near-term growth. However, AZEK has several self-help initiatives that will expand EBITDA margins in FY23 and beyond.
He sees the biggest opportunity in recycling. Modular production & a variable cost structure should mitigate margin pressure in weak markets. There is a multi-year material conversion opportunity from wood.
The analyst added that a strong balance sheet (net leverage of 1.6x) provides financial flexibility.
Credit Suisse analyst Dan Oppenheim believes that AZEK's 2022 will likely come in at the low end of guidance based on high channel inventory.
Oppenheim expected AZEK would reiterate its 2022 guidance - as its fiscal year ends September 30 but says that they sensed a slightly more cautious tone in recent comments.
AZEK reaffirmed its 3Q (June) guidance but then said that full-year 2022 would come in at the low end of its guidance, implying weakness in 4Q (Sep).
Price Action: AZEK shares are trading lower by 13.90% at $15.81 on the last check Thursday.
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