Construction Partners Slashed at Baird

Construction Partners Slashed at Baird Feb. 12, 2024, 11:59 a.m., readers: 8

Baird analysts adjusted their rating for Construction Partners (NASDAQ:ROAD) to Neutral from Outperform, while increasing the price target to $50 from $46. Baird’s commentary emphasized that the risk/reward dynamic for Construction Partners is now more evenly balanced, prompting the downgrade primarily due to valuation reasons. The analysts noted that the market now more accurately reflects the company's potential for both organic and acquisition-driven growth, as well as the benefits of a robust funding environment. The adjustment to a Neutral rating is not based on perceived risks but on the view that the stock is fairly priced at 13x forward twelve months (FTM) EBITDA and offers a roughly 3% free cash flow yield. The analyst acknowledges that the company's strong growth prospects were clearly communicated during the investor day in October, highlighting its appealing financial model. However, with these growth expectations now well understood by the market, the analysts see fewer opportunities for significant price appreciation in the near term.

About NASDAQ: ROAD

C onstruction Partners, Inc., a civil infrastructure company, engages in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina. The company, through its subsidiaries, provides various products and services to public and private infrastructure projects, with a focus on highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; paving activities, including the construction of roadway base layers and application of asphalt pavement;

Price: 53.76
Market cap: 2.8 billion USD
Eps: 1.11
P/e ratio: 48.43
Focus Analysis On: ROAD