Legg Mason Upgrades Trex to 'Buy'

Analyst David Weaver cites valuation and a positive outlook for the maker of non-wood decking products

Legg Mason upgraded Trex (TWP ) to buy from hold.

Analyst David Weaver says his upgrade follows a sharp pullback in shares in recent months, and is based on his outlook for strong growth of the total composite decking market, as Trex is maintaining its category leadership. He's keeping his 2003 and 2004 earnings per share estimates of $1.69 and $2.07, respectively.

Weaver notes Trex is the largest composite decking manufacturer, controlling 60%-70% of the market. He believes Trex can continue to grow the business at a 20%-30% rate as its category continues to take share from wood. He has a $44 price target, representing a multiple of 21.3 times his 2004 earnings per share estimate.

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