NEW YORK (TheStreet) -- Deutsche Bank upgraded Builders FirstSource (BLDR) to "buy" from "hold" and increased its target price to $12 from $5. The firm cited growth in the Southeastern U.S. markets and expectations for more favorable industry pricing dynamics.
"Builders FirstSource is one of the most highly exposed public companies to US new residential construction," the firm wrote in a research note. "The firm's operations are primarily in the South/Southeastern US, where volumes have grown significantly since the dark days of the housing bust.
"Growth should continue in these markets and BFS is likely to see the added benefit of an industry that is moving towards more rational pricing, which is the next leg of the cycle for BFS. Cost take-outs in the downturn mean that EBITDA margins should return to close to peak levels in 2015 and higher thereafter."
The stock hit a five-year high of $9.10 as of 2:10 p.m. on Monday.
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Separately, TheStreet Ratings team rates BUILDERS FIRSTSOURCE as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BUILDERS FIRSTSOURCE (BLDR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins."