What Happened?

Shares of composite decking and railing products manufacturer Trex Company (NYSE: TREX) jumped 6.8% in the morning session after analysts at Baird upgraded the stock. The investment firm raised its rating on the composite decking manufacturer to "Outperform" from "Neutral" and boosted its price target to $75 from $65. Baird cited confidence in the company's stable sell-through trends, which refers to the rate at which its products are sold to end-customers by distributors. 

The analyst noted that while the stock has underperformed the broader market this year, its valuation is now attractive. Baird expects the company's earnings per share for 2025 to exceed the peak levels seen in 2021, supported by key growth initiatives like new products and market conversion from traditional wood decking.

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What Is The Market Telling Us

Trex’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Trex is down 5.9% since the beginning of the year, and at $64.21 per share, it is trading 25.2% below its 52-week high of $85.82 from July 2024. Investors who bought $1,000 worth of Trex’s shares 5 years ago would now be looking at an investment worth $1,034.

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