Zacks Investment Research downgraded shares of Beacon Roofing (BECN) from OUTPERFORM to NEUTRAL on December 21, 2012, with a target price of $35.00.
We have downgraded our recommendation on Beacon Roofing to Neutral with a target price of $35. Fourth-quarter 2012 earnings were $0.60 per share, in line with the Zacks Consensus Estimate. Earnings increased 7% annually, attributable to higher sales on the back of accretive acquisitions and gross margin expansion offset by higher operating expenses. Revenues increased 4% to $598 million, falling short of the Zacks Consensus Estimate. Beacon Roofing's acquisition pipeline remains active and we expect the acquisitions to continue at an accelerated pace in the near term. Moreover, both residential and non-residential construction sectors are showing signs of improvement, which bodes well for the company. However, risks remain in the form of poor execution of the company's acquisition strategy, longer-than-expected downturn in residential and non-residential roofing markets and inability to pass on raw material inflation to customers.
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