RBC analyst Mike Dahl lowered the firm’s target on QXO to $18 from $27 while maintaining an ‘Outperform’ rating.

  • Dahl wrote that recent channel checks indicate residential roofing demand stayed weak through the third quarter.
  • He trimmed QXO estimates on softer residential roofing activity and fresh pressure in new residential construction.
  • RBC’s note comes a day after Melius Research initiated coverage of QXO with a ‘Buy’ rating, citing “compelling value.”

Shares of QXO, Inc. (QXO) fell sharply on Wednesday, hitting a fresh 52-week low, after RBC Capital cut its price target, saying inventory levels look elevated heading into the fourth quarter amid weak residential roofing demand.

The shares were down 10% at the time of writing, on track for their worst day since July 2024, if the losses hold.

RBC Weighs In On QXO

The decline followed a research note from RBC analyst Mike Dahl, who lowered the firm’s target to $18 from $27 while maintaining an 'Outperform' rating. Dahl wrote that recent channel checks indicate residential roofing demand stayed weak through the third quarter. Expected inventory reductions by distributors failed to appear, leaving stock levels elevated heading into the fourth quarter, he said.

He said the pattern “creates clear risks” for the broader building-products group and trimmed QXO estimates on softer residential roofing activity and fresh pressure in new residential construction. Dahl’s price target still implies a potential upside of about 49% from the stock’s closing price on Tuesday.

RBC’s note comes a day after Melius Research initiated coverage of the housing sector, including homebuilders, building products, distributors and home centers. The firm is negative on the homebuilders but said it is "more constructive" on the building products and distributors. It also selectively assigned ‘Buy’ ratings to four of 12 building product and distributor names, including James Hardie (JHX), Trex (TREX), Mohawk Industries (MHK) and QXO (QXO). The firm cited “compelling value” for its QXO rating.

QXO’s Recent Acquisitions

QXO is a Greenwich, Connecticut-based distributor and installer of building products that has rapidly scaled through acquisitions. The company completed its acquisition of TopBuild in July and expanded product offerings and installation capabilities, adding exposure to markets such as data centers. The deal is expected to produce at least $300 million in annual synergies by 2030, largely from procurement, pricing, and cross-selling.

Second-quarter results released in August showed net sales of $3.25 billion, aided by the April close of the Kodiak Building Partners acquisition, against a net loss of $55 million. Adjusted earnings were $0.08 a share and adjusted core profit reached $272 million. Those figures met or slightly exceeded some forecasts, yet investors have remained focused on housing softness, integration costs, and leverage as mortgage rates and builder activity stay subdued. Chairman and Chief Executive Brad Jacobs, however, has set a target of roughly $50 billion in annual revenue within the decade.

How Did QXO Retail Traders React?

On Stocktwits, retail sentiment around QXO stock stayed within the ‘neutral’ territory over the past 24 hours, while message volume increased from ‘low’ to normal’ levels.

A Stocktwits user said they are adding more of the company’s shares to their portfolio. “...until I see something wrong other than the macro environment I am buying for long term,” they said.

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Another said that they love the risk-reward ratio on the stock following the company's multiple acquisitions.

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QXO stock has fallen 43% year-to-date. 

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