Benzinga | Jan 31, 2022 01:21PM EST

Stephens Upgrades Azek To Overweight - Read Why

* Stephens analyst Trey Grooms upgraded Azek Company Inc (NYSE:AZEK) to Overweight from Equal Weight and lowered the price target to $41 (an upside of 27%), from $47.

* Grooms notes the stock has pulled back about 33% year-to-date as the expectation for rising rates has led to a selloff of high growth, high multiple stocks.

* The analyst sees that decline as overdone given the view that Azek's residential demand drivers and strong repair and remodel demand driven by high home equity values will continue to drive "impressive" growth for several years.

* Meanwhile, the capacity expansion will enable the company to fully benefit from these solid cyclical and secular trends, contends Grooms.

* Recently, UBS analyst John Lovallo initiated coverage of Azek with a Buy rating and a price target of $52 (an upside of 60%), as part of a broader research note on the U.S. Building sector.

* The analyst noted 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.

* Price Action: AZEK shares traded higher by 3.85% at $32.39 on the last check Monday.