Loop Capital has adjusted its price target for Builders FirstSource (BLDR, Financial), bringing it down from $190 to $170. Despite maintaining a Buy rating on the stock, the firm cites several factors influencing this decision. Adverse weather conditions as of this year, coupled with ongoing deflationary pressures in value-added segments like Engineered Wood Products (EWP), have contributed to a more cautious outlook.
Additionally, the analysis points to a sluggish residential demand recovery, hindered by affordability issues and broader economic uncertainties. Despite these challenges, Loop Capital remains optimistic that builders like Builders FirstSource will find a strong footing for recovery. This optimism is based on the company's significant exposure to residential markets, improved margins compared to pre-pandemic levels, and potential for earnings normalization after recovering from short-term deflationary pressures.
