Benzinga | Dec 15, 2021 03:02PM EST

JPMorgan Upgrades Azek, Downgrades Trex, Installed Building Products

* JPMorgan analyst Michael Rehaut upgraded Azek Company Inc (NYSE:AZEK) to Overweight from Neutral and raised the price target to $56 (an upside of 31%) from $54.

* The analyst believes Azek's valuation - currently trading at "near-record high discounts" to Trex Company Inc, does not fully reflect the company's fundamental prospects over the next two years as well as on a longer-term basis.

* Rehaut estimates residential sales growth of 20% and 12% in fiscal 2022 and 2023, respectively, driven by several factors, including material conversion continuing in the decking market as well as Azek's capacity expansion supporting its growth initiatives.

* Rehaut downgraded Trex Co (NYSE:TREX) from Neutral to Underweight and announced a price target of $135 (an upside of 1%).

* The analyst expects relative underperformance in the next six to 12 months.

* Rehaut noted Trex' total return of 63% YTD outpaced the 20% average increase for JPMorgan's building products universe, "As a result, following the stock's strong 2021 performance and full valuation, the latter of which is likely fully pricing in a continued strong fundamental performance in 2022, we prefer a better entry point for Trex (TREX), at least on a relative basis."

* Rehaut downgraded Installed Building Products Inc (NYSE:IBP) to Neutral from Overweight with an unchanged price target of $166 (an upside of 21%).

* The analyst downgrades the shares on valuation following the stock's 34% gain year-to-date. Rehaut believes Installed Buildin's valuation fairly reflects the company's "positive fundamental attributes."

* Price Action: AZEK shares are trading higher by 1.82% at $42.85, IBP higher by 0.5% at $137.18, and TREX lower by 2.27% at $133.69 on the last check Wednesday.