Beacon Roofing inventory drops 7% as Baird downgrades on pricing, margin dangers

Beacon Roofing Provide (NASDAQ:BECN) dropped as a lot as 7% on Friday after Baird downgraded the inventory to Impartial from Outperform because it expects pricing and margins to backslide in 2023.

Baird’s latest Q3 Roofing Survey signifies “aggressive pricing habits might be reemerging as demand slows amid softening residential new development/restricted storm exercise and as shingle availability improves,” analyst David Manthey wrote in a be aware to shoppers.

He expects the Florida roofing market to see important demand after Hurricane Ian, however he believes the inventory overreacted relative to the nationwide market image.

“Internet, we advocate traders cut back publicity following important YTD outperformance, with the prospect of elevated value competitors forward, regardless of favorable cycle timing and up to date company-specific enchancment,” Manthey added.

Baird additionally reduce its value goal on BECN to $65 from $77, implying potential upside of 12.4% to its final shut. It additionally adjusted 2023-2024 EPS estimates to $4.97/$5.68.

Baird’s ranking contrasts SA Quant’s Purchase ranking on BECN, which relies on the inventory scoring properly in issue grades progress, profitability and momentum.

Wall Road analysts on common are additionally bullish on BECN (4 Robust Purchase, 2 Purchase, 9 Maintain).

Shares of BECN have fallen 3.7% YTD.