Truist lowered the firm’s price target on Summit Materials (SUM) to $43 from $48 but keeps a Buy rating on the shares. The company’s stock fell 10% after its announcement to acquire Cementos Argos’ USA cement business, with the biggest push back from investors being lower than average margins of the acquisition despite being “upstream”, which is usually a margin enhancer, the analyst tells investors in a research note. Summit Materials had been closing the valuation gap with Martin Marietta (MLM) and Vulcan Materials (VMC), but this trend will be put on hold short term with the deal, the firm added.
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Read More on SUM:
- Summit Materials downgraded to Peer Perform from Outperform at Wolfe Research
- Summit Materials to combine with Argos USA in transaction valued at $3.2B
- Summit Materials, Cementos Argos combine in transaction valued at $3.2B
- Summit Materials to Combine with Argos USA, Creating a Materials-Led Enterprise with National Scale
- Summit Materials management to meet with Truist