Trex Company’s medium term targets are compelling, says DA Davidson

DA Davidson keeps a Neutral rating and $73 price target on Trex after the company’s Investor Day presentation that included a focus on market size and growth opportunities, channel relationships, efficient manufacturing, and brand leadership. The company also established 5-year sales and EBITDA objectives, targeting an 11%-13% top-line CAGR and a 34%% EBITDA margin in 2028, and while these targets looks “compelling”, they are also underpinned by elevated wood conversion assumptions and implied incremental EBITDA margins that are largely consistent with previously alluded to long-term ranges, the analyst tells investors in a research note.