AZEK Company Inc. (AZEK) has started the year strong, prompting Citi to reiterate its "Buy" rating with a raised price target of $61, up from $60. The company reported a significant beat on Q1 2025 earnings, with revenue at $285 million versus a $265 million consensus, and EPS at $0.17 compared to $0.13 expected. This performance is driven by double-digit residential sell-through and new stocking locations, alongside below-normal channel inventories. AZEK has also increased its FY 2025 guidance, with revenue now projected at $1.52-1.55 billion and EBITDA at $402-418 million, reflecting its robust start.
Citi highlights AZEK's continued market share gains, particularly in the Pro channel, and its strategic expansion in recycling capabilities through the acquisition of an Indiana PVC/PE recycler. The company is also poised to capitalize on the wood-to-composite conversion trend, with wood still comprising about 60% of the rail market. "AZEK continues to gain share, mostly reflected in Pro channel partnerships & channel expansions," notes Citi.
Despite a lighter Q2 guidance, Citi remains optimistic about AZEK's growth trajectory, modeling EBITDA growth ramping from 6% y/y in Q2 to 8% y/y in the second half of the year. The valuation is based on a 22x NTM EBITDA multiple, reflecting AZEK's significant share gains and improved brand presence.
As of February 5, AZEK's stock is trading at $51.90, up 3.32% from the previous close.