Builders FirstSource (BLDR) is facing a weaker backdrop for single-family housing starts and a more challenging competitive environment for the rest of the year, Oppenheimer said in a note Thursday.

The brokerage said it sees 2025 as a transitional period for the company as it absorbs softer demand, continued margin normalization, and less capacity for acquisitions and share buybacks.

Oppenheimer noted that Builders FirstSource's revenue has historically shown a 92% correlation to single-family housing starts, which the firm expects to decline 9% in 2025. The company has deployed about $8 billion on acquisitions and buybacks since early 2022, reducing its share count by 36%, but capital deployment is likely to slow sharply in H2.

The firm now expects Builders FirstSource to post 2025 adjusted earnings of $7.44 per share and revenue of $15.87 billion, both below consensus estimates of $8.30 per share and $16.32 billion, respectively.

The note also cited negative investor sentiment, with many clients expecting a reduction in 2025 earnings before interest, taxes, depreciation, and amortization guidance. However, some investors have become more constructive, anticipating that housing starts could be near a bottom.

Oppenheimer reiterated an outperform rating on the shares but lowered its price target to $155 from $165.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

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