RBC downgrades building product companies, flags 2027 headwinds
XLI•RBC Capital Markets cut ratings on Builders FirstSource and Owens Corning to sector perform from outperform, and Mohawk Industries to underperform from sector perform. It cited weak flooring demand and mounting price and cost pressures, and said larger challenges are expected in 2027.
1. Ratings and outlook
RBC said new residential construction faces the most risk, while other construction markets remain uneven. It prefers distributors over manufacturers as inflation and cost pressures persist, and said near-term results could be uneven, with timing issues potentially causing sharper stock swings in 2027.
2. Price target cuts
RBC lowered its price target for Builders FirstSource to $62 from $88, Owens Corning to $127 from $172 and Mohawk Industries to $112 from $130. It also cut targets for eight other companies, including Whirlpool to $22 from $32 and QXO to $18 from $27.
