What Happened?
Shares of composite decking and railing products manufacturer Trex Company (NYSE: TREX) jumped 4% in the morning session after BMO Capital reiterated its Outperform rating on the stock.
The investment firm described Trex as a "high quality name on sale," despite acknowledging near-term industry headwinds. BMO Capital's positive view was based on the company's dominant market position as North America's largest composite decking producer, with an approximate 45% market share. The firm also cited Trex's strong distribution relationships, contractor loyalty, and a long-term opportunity to gain market share from wood alternatives. This assessment came even as forecasts from groups like the Builders Merchants Federation suggested a slow start for the building materials sector in 2026.
After the initial pop the shares cooled down to $40.27, up 4.5% 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 3 days ago when the stock gained 3.6% on the news that 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.
Trex is up 12.4% since the beginning of the year, but at $40.27 per share, it is still trading 45.9% 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 $447.57.
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