QXO's (QXO) planned acquisition of TopBuild (BLD) for about $17 billion is incrementally positive and expected to be accretive, positioning the company as the leading distributor and installer of insulation and related building products in North America, Oppenheimer said in a Monday note.

The addition of TopBuild brings a premium asset with industry-leading margins and strong free cash flow conversion. The deal is expected to accelerate QXO's platform through pricing power, cross-selling opportunities, and the ability to leverage customer value chains and vendor relationships, the firm said.

Oppenheimer said it has built a pro-forma model combining QXO and TopBuild from 2024 through 2030, with 2030 estimates for revenue, adjusted EBITDA, and free cash flow of $35 billion, $5.5 billion, and $3.7 billion, respectively, all significantly above prior estimates.

The firm said the transaction is accretive on both earnings and free cash flow per share through 2030, adding that it expects lower near-term "reported" estimates for QXO from Q1 to Q3 due to challenging macro conditions.

Oppenheimer has an outperform rating on QXO and increased the company's price target to $32 from $30.

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