Baird upgrades Trex stock rating to Outperform on stable trends
Investing.com
Published Jul 10, 2025 05:16AM ET
Investing.com - Baird has upgraded Trex (NYSE:TREX) from Neutral to Outperform and raised its price target to $75.00 from $65.00. According to InvestingPro data, the company currently trades at a P/E ratio of 32.6x and maintains a FAIR financial health score, with strong profitability metrics including a 40.6% gross margin.
The research firm cited relatively stable sell-through trends as a positive for sentiment, particularly following slowdowns observed in late Q2 of last year.
Baird noted that Trex shares have underperformed year-to-date, declining 18% compared to the S&P, while the company's relative valuation premium of approximately 20% versus next-twelve-months S&P is near multi-year lows.
The firm expects relative estimate stability to support better sentiment and relative valuation, with 2025 earnings per share on track to surpass peak 2021 levels. Trex reiterated its 2025 revenue and EBITDA guidance in late June.
Baird maintained its current 2025/2026 estimates, which include approximately 2% sell-out growth in 2025, and suggested investors can refocus on key growth initiatives including continued conversion, new product introductions, and railing attachment initiatives.
In other recent news, Trex Company announced the resignation of its Chief Financial Officer, Brenda Lovcik, who will continue in her role until early August, after which CEO Bryan Fairbanks will temporarily assume her responsibilities. Despite this leadership change, Trex reaffirmed its financial guidance for 2025, projecting a revenue growth of 5%-7% and an EBITDA margin exceeding 31%. The company also confirmed it is on track to achieve its second-quarter revenue target of $370 million to $380 million. Analysts have varied perspectives on Trex, with Benchmark maintaining a Buy rating and a price target of $80, citing strong first-quarter results and positive momentum in the outdoor living sector. Truist Securities also maintained a Buy rating with a $75 price target, highlighting Trex's resilience in challenging market conditions. Conversely, DA Davidson held a Neutral stance with a $60 target, noting potential economic uncertainties affecting consumer confidence. Stephens adjusted its price target to $65 from $73, maintaining an Equal Weight rating due to concerns over gross margins and economic uncertainties. These developments provide a comprehensive view of the company's current financial health and market position.
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