James Hardie's (JHX) management outlined a regional conversion strategy to accelerate North American share gains, with growth opportunities across siding, decking, railing and other exterior products, RBC said in a Wednesday note.

The brokerage highlighted a roughly $23 billion North American conversion opportunity, with about 70% to 85% of markets across the relevant product categories still addressable, including opportunities to shift from vinyl and engineered wood to fiber cement and from wood decking to PVC and composite products.

Management targets 4% to 7% organic revenue growth above the North American market, driven by material conversion, growth initiatives and revenue synergies, with about 35% adjusted EBITDA flow-through and 40% free cash flow conversion.

James Hardie expects to achieve its $125 million cost synergy target about one year ahead of its original three-year timeline, exiting fiscal 2027 at a $125 million run rate, while its $500 million five-year commercial revenue synergy goal remains on track, driven by distribution partnerships and contractor cross-selling, the report added.

RBC reiterated its sector perform rating on the stock and AU$43 price target.

James Hardie shares were up 2.7% in Wednesday trading.

Price: 27.81, Change: +0.75, Percent Change: +2.78