Benzinga | Nov 19, 2021 09:29AM EST

BofA Downgrades This Construction Company Citing Profitability Issues

BofA analyst Michael Feniger has downgraded Construction Partners Inc (NASDAQ:ROAD) to Neutral from Buy and raised the price target to $43 from $37. The increased price target implies an upside of 7.96%.

* The analyst notes that Construction Partners' demand outlook is "certainly favorable" following the passage of federal Infrastructure stimulus, but the headwinds to profitability that include rising diesel and asphalt price, labor shortages, and supply chain constrains will linger into early FY22.

* Feniger says the company's stock is up 37% year-to-date, but to generate a higher multiple, investors will monitor how much future earnings growth is top-line driven.

* The company plans to release its fiscal 2021 fourth quarter and full-year results on November 23, 2021, before the market opens.

* Price Action: ROAD shares closed lower by 0.18% at $39.83 on Thursday.