What Happened?
Shares of composite decking and railing products manufacturer Trex Company (NYSE: TREX) jumped 3.6% in the afternoon session after UBS upgraded the stock to Buy from Neutral and raised its price target.
The analyst also lifted the price target to $52 from $50. The firm noted it saw the company returning to high single-digit year-over-year sales growth in fiscal 2027, following five consecutive years of below-trend activity. The research note added that Trex was well-positioned to drive margin expansion in 2027 and beyond. The upgrade reflected the firm's increased confidence in the company's future market performance.
After the initial pop the shares cooled down to $37.48, up 3.5% from previous close.
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What Is The Market Telling Us
Trex’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 3.7% on the news that Goldman Sachs maintained a 'Buy' rating on the company's stock, even while lowering the price target.
The action came from analyst Susan Maklari, who kept the positive rating on Trex's shares but cut the price target to $54.00 from $63.00. Investors appeared to focus on the continued confidence shown by the 'Buy' rating rather than the reduced price outlook. The positive sentiment may have also been supported by a broader industry report highlighting growth in the market for sustainable building materials. The report noted rising demand for recycled and reusable materials in construction, a market trend that directly benefited Trex's business.
Trex is up 4.6% since the beginning of the year, but at $37.48 per share, it is still trading 49.7% below its 52-week high of $74.44 from January 2025. Investors who bought $1,000 worth of Trex’s shares 5 years ago would now be looking at an investment worth $434.54.
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