Zacks Investment Research upgraded shares of Beacon Roofing Supply, Inc. (BECN) from UNDERPERFORM to NEUTRAL on January 02, 2014, with a target price of $42.00.
We are upgrading our recommendation on Beacon Roofing from Underperform to Neutral, with a target price of $42.00. Fourth-quarter 2013 adjusted earnings of Beacon dropped 7% year over year to $0.56 per share, due to lower gross margins. The company will benefit from continued focus on acquisition and its strong balance sheet position. U.S. housing starts also jumped to the highest level in five years, in November. While, pricing pressure, general market softness and competitive market remain headwinds for top-line growth. Further, the Architecture Billings Index fell to 49.8 in November, from 51.6 a month earlier due to uncertainty in demand. Moreover, higher mix of non-residential roofing products and sales mix will negatively impact gross margins in the near term.
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