James Hardie Upgraded By BofA On AZEK Deal: Analyst Sees Buying Window After Recent Selloff, But Retail Stays Extremely Bearish

Shares of James Hardie Industries Plc. (JHX) gained over 3% in Thursday’s regular trading session before paring some gains in after-market hours as investors remain focused on the company’s acquisition of U.S. building products maker AZEK Company Inc. (AZEK).

According to The Fly, analysts at Bank of America (BofA) Securities upgraded James Hardie to ‘Buy’ from ‘Underperform’ with a minor reduction in price target to $27.35 from $27.40. This implies an upside of 11% from Thursday’s closing price.

The brokerage believes that the recent selloff in the James Hardie stock presents an attractive buying opportunity for investors looking to enter this sector.

It added that the AZEK deal – if it passes muster – will be accretive to James Hardie’s earnings per share (EPS) from fiscal year 2027.

The brokerage called James Hardie a "best-in-class company with significant moat given high-quality products,” underscoring its bullish outlook for the cement manufacturing company.

To recall, James Hardie announced on Monday that it will acquire AZEK in a $8.75 billion cash and stock deal – AZEK shareholders will receive $26.45 in cash and 1.034 shares of James Hardie for each share of AZEK.

This brings the total compensation per AZEK share to $56.88, a premium of over 37% from the stock’s closing price at the end of last week.

This led to a 17% plunge in James Hardie’s stock on Monday, followed by a flurry of downgrades from analysts, citing a potential dilution of the company’s returns and dragging its performance.

Retail sentiment on Stocktwits around James Hardie remained ‘extremely bearish’ despite the upgrade from BofA.

James Hardie’s stock has fallen by more than 20% year-to-date, while AZEK’s stock is now up nearly 5% after this week’s rally.

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