QXO Stock Surges After Wolfe Initiates Coverage: Retail Optimism Surges
Synopsis
Wolfe Research cited strong organic EBITDA growth potential and acquisition-driven value in the building products distribution space.
Shares of commercial and residential roofing provider, QXO Inc. (QXO) traded 10% higher on Friday after Wolfe Research initiated coverage on the stock with an ‘Outperform’ rating and a $44 price target.
In a note to investors, the firm described QXO as offering "exceptional" organic earnings before interest, taxes, depreciation, and amortization (EBITDA) growth and a "distinct" opportunity to generate value through acquisitions, as it aims to reshape the building products distribution sector.
The firm highlighted QXO’s use of data-driven and technology-centric strategies, projecting that the company could double its organic EBITDA within five years.
Wolfe believes this growth trajectory could lead to notable improvements in margins and expanded market presence.
In April, QXO completed its previously announced acquisition of Beacon Roofing Supply, Inc. at a purchase price of $124.35 per share, bringing the deal’s total value to roughly $11 billion.
With the acquisition, QXO becomes the largest publicly traded distributor of roofing, waterproofing, and related building materials in the U.S.
QXO aims to achieve $50 billion in annual revenue over the next decade by combining strategic acquisitions with internal business expansion.
For its first quarter (Q1), the company's revenue declined 6.4% year-on-year to $13.5 million, beating the analysts' consensus estimate of $12 million.
Net income, which included $56.6 million in interest earnings, totaled $8.8 million.
Adjusted EBITDA loss stood at $8.9 million, down from a $0.5 million gain during the same period in 2024.
On Stocktwits, retail sentiment around QXO changed to ‘bullish’ from ‘bearish’ with a high message volume.
A bullish Stocktwits user praised the initiation of coverage.
QXO stock has gained over 16% year-to-date and has lost over 90% in the last 12 months.
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