Builders FirstSource (BLDR) faces a prolonged downturn due to slowing single-family housing starts, gross margin pressure in H2 of 2025 and a muted 2026 setup, RBC Capital Markets said in a note emailed Friday.

The firm reduced its full-year sales forecast to $15.19 billion from $16.38 billion because of ongoing softness in demand and reduced building activity.

"With leverage above target, there is less potential support from near-term capital deployment," RBC said. This removes a potential catalyst for the stock while fundamentals remain under pressure.

The firm said it expects long-term earnings growth and structural margin strength, but short-term headwinds in volume and pricing are expected to keep Builders' stock rangebound.

RBC downgraded its rating to sector perform to outperform and reduced the price target to $129 from $132.

Price: 125.98, Change: -1.15, Percent Change: -0.90