Baird says Beacon acquisition ‘might make sense’ for QXO

Baird kept an Outperform rating and $120 price target on Beacon Building Products (BECN) following a Wall Street Journal report that QXO (QXO), which Baird does not cover, is in talks to acquire Beacon. Baird spoke to QXO chairman Brad Jacobs about the potential deal, and noted that “Jacobs’ investment thesis for value creation in the space is via application of technology,” adding that Beacon is a “leader in digital within the roofing industry.” Additionally, the analyst noted that QXO intends to “pay a HSD/LDD EBITDA multiple for their platform acquisition and Beacon’s trading multiple resides within that range.” However, the firm added that roofing distribution is “already fairly consolidated… though the complementary products market remains highly fragmented.”