Construction Partners price target lowered to $104 from $112 at Raymond James

Raymond James lowered the firm’s price target on Construction Partners (ROAD) to $104 from $112 and keeps a Strong Buy rating on the shares. While Q4 began with some distress in October with the landing of Hurricane Milton and the recent aftermath of Hurricane Helene, the rest of the quarter has shaped up to be fairly quiet weather-wise for construction materials, the analyst tells investors in a research note. The firm continues to believe that the story for the aggregates players remains firmly about solid pricing power leading to durable unit margin expansion, and points out that diesel — a key cost input for rock crushing — has continued to slide lower, which should alleviate some of the stickier costs such as labor, maintenance, and electricity and could prove a material tailwind to unit margins should diesel prices continue to linger in their current range. While the new administration has the potential for less onerous DOJ reviews on M&A, and less regulatory burden overall, the flip side could bring about deportations, or shrinking the construction labor force, and a potential revocation of the Inflation Reduction Act, both of which would be negative for the construction industry.