UBS Initiates Coverage On Several Building Sector Companies

• UBS analyst John Lovallo initiated coverage on several Building Products companies.

• The analyst initiated Masco Corp (NYSE: MAS) with a Buy rating and a price target of $86.

• Despite tough comparisons and inflation, Lovallo expects revenue and operating margins to expand year-over-year in 2022. He also cites the company's diverse portfolio and its leading exposure to lower-ticket repair and remodeling products.

• The analyst initiated Jeld-Wen Holding Inc (NYSE: JELD) with a Buy rating and a price target of $39 as part of a broader research note on the U.S. Building sector.

• Lovallo says consensus forecasts underestimate the company's growth and margin expansion opportunity, adding that Jeld-Wen also offers the best in class 14.3% free cash flow yield.

• The analyst initiated Armstrong World Industries Inc (NYSE: AWI) with a Sell rating and a price target of $103.

• Lovallo says that builder stocks could "spring" this Spring, with average homebuilder P/E multiple already appearing to reflect downward revisions to estimates, rising interest rates, and a potential sharp decline in housing activity.

• The analyst added that he does not expect a material deterioration in volume as pent-up demand is real and continues to be unleashed by COVID impacts.

• The analyst initiated Owens Corning (NYSE: OC) with a Buy rating and a price target of $122.

• Lovallo mentions the company's over $1 billion of free cash flow per year provides significant dry powder for growth investment and return of capital to shareholders.

• Lovallo adds that the average homebuilder P/E multiple already reflects downward revisions to estimates, rising interest rates, and a potential sharp decline in housing activity.

• The analyst initiated Azek Company Inc (NYSE: AZEK) with a Buy rating and a price target of $52.

• The analyst says the company is well-positioned to outperform the industry given its size, innovation, new product offerings, further penetration into the big box retailers, superior recycling capability, a push into adjacent product lines, and significantly increased production capacity.

• The analyst initiated Trex Company Inc (NYSE: TREX) with a Neutral rating and a price target of $111.

• Lovallo says the valuation overhang is the greatest for this stock among the names covered in his report.

• However, given its general composite penetration, Trex is well-positioned to outperform the industry based on its size, innovation, and new product offerings, Lovallo notes.

• Price Action: MAS traded higher by 1.20% at $66.38, JELD up by 5.16% at $25.06, AWI by 1.32% at $107.08, OC up by 3.57% at $94.56, AZEK up by 0.52% at $36.50, and TREX lower by 1.36% at $98.25 on the last check Thursday.

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