Summit Materials resumed with Overweight from Underweight at JPMorgan

JPMorgan analyst Adrian Huerta upgraded Summit Materials to Overweight from Underweight with a price target of $47, up from $40, after resuming coverage following a period of restriction. The acquisition of Argos USA is inline with the company’s growth strategy despite increasing its cement exposure as it will give Summit Materials a position in key markets that it wasn’t serving before. The deal will also decrease the company’s seasonality through geographic diversification and increase annual EBITDA generated from the materials segment, the analyst tells investors in a research note. The firm says Summit’s free cash flow conversion rate has increased considerably, while it pays very low federal taxes, which could continue for a couple more years.