Truist analyst Keith Hughes downgraded Installed Building Products to Hold from Buy with a price target of $200, up from $160, as part of a broader research note on Building Products distributors. Following the group’s “dramatic outperformance” in 2023, these stocks give way to rotation to others in the analyst’s coverage group in 2024, particularly those focused on renovation, the firm tells investors in a research note. Truist further states that multi-family is only 10%-15% of sales for the group, but the firm expects to see a substantial correction, causing unit and margin falls that limit upside to fundamental results and potential weak points in specific quarters. Moreover, the firm warns that these stocks are particularly vulnerable to market over-speculation on the quantity or timing of interest rate cuts, and while the market expectations is “directionally correct”, it may overestimate how much or how quickly rate cuts occur.
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