Analyst Philip Ng from Jefferies maintained a Buy rating on Eagle Materials (EXP – Research Report) and increased the price target to $290.00 from $245.00.
Philip Ng has given his Buy rating due to a combination of factors involving Eagle Materials’ strategic investment and favorable market conditions. Ng highlights the company’s initiative to modernize its Laramie, WY, cement facility with a $430 million investment, which is poised to significantly increase capacity while concurrently reducing production costs by about 25%. The expected internal rate of return (IRR) for this investment is over 15% on a cash basis after taxes, which is considered a robust return, especially given the current challenges in acquiring new cement assets. Eagle Materials’ strategic efforts to utilize existing infrastructure and enhance efficiency underpin Ng’s positive outlook on the stock.
Moreover, Ng’s perspective on the broader market dynamics further supports the Buy rating. He draws attention to the high replacement cost of cement capacity, estimated at approximately $700 per ton, suggesting that new capacity additions like those planned by Eagle Materials are likely to be valued favorably. Ng also notes the company’s strong free cash flow profile, which positions it well for pursuing mergers and acquisitions as well as stock buybacks. The comparison with Summit Materials’ recent acquisition and the favorable valuations it received lend credence to the idea that Eagle Materials is making a disciplined and strategic move to unlock capacity at a favorable return, thereby enhancing its overall valuation and investment appeal.
According to TipRanks, Ng is a 5-star analyst with an average return of 12.3% and a 61.05% success rate. Ng covers the Consumer Cyclical sector, focusing on stocks such as Ball, Pactiv Evergreen, and Crown Holdings.
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Eagle Materials (EXP) Company Description:
Eagle Materials is a leading manufacturer of heavy construction and light building materials in the United States. Its primary products include Portland Cement and Gypsum Wallboard. Further, its products are primarily used for infrastructure development and residential construction.
Read More on EXP:
- Eagle Materials Inc. Enhances Operations with Wyoming Plant Expansion
- Eagle Materials to invest $430M to modernize Wyoming cement plant
- Eagle Materials price target raised to $300 from $250 at Stifel
- Eagle Materials price target raised to $310 from $290 at Loop Capital
- Eagle Materials and Heidelberg Launch Texas Slag Cement Facility
