Construction Partners Slashed at Baird


Baird analysts adjusted their rating for Construction Partners (NASDAQ:ROAD) to Neutral from Outperform, while increasing the price target to $50 from $46.
Baird’s commentary emphasized that the risk/reward dynamic for Construction Partners is now more evenly balanced, prompting the downgrade primarily due to valuation reasons. The analysts noted that the market now more accurately reflects the company’s potential for both organic and acquisition-driven growth, as well as the benefits of a robust funding environment. The adjustment to a Neutral rating is not based on perceived risks but on the view that the stock is fairly priced at 13x forward twelve months (FTM) EBITDA and offers a roughly 3% free cash flow yield.
The analyst acknowledges that the company’s strong growth prospects were clearly communicated during the investor day in October, highlighting its appealing financial model. However, with these growth expectations now well understood by the market, the analysts see fewer opportunities for significant price appreciation in the near term.

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