Builders FirstSource price target raised to $225 from $175 at Wedbush

Wedbush raised the firm’s price target on Builders FirstSource to $225 from $175 and keeps an Outperform rating on the shares. Following the Q3 2023 Builders FirstSource’s call in November, the firm took a conservative approach for its Q4 2023 assumptions in light of mortgage rates near the peak of the cycle and framing lumber prices having averaged a more than 20% year-over-year decline during October and November. The worst of the year-over-year lumber price declines occurred the week ended November 3, 2023, and lumber prices as of last week are about 6% higher than the low point. Also during Q4 2023, national single family housing starts were 22% higher year-over-year and up 18% year-over-year in the Census South region which typically represents 65% of annual single family starts. As a result of these catalysts, Wedbush anticipates Builders FirstSource’s Q4 2023 sales and AEBITDA may be distinctly higher than its prior forecasts.