Wedbush Downgrades Builders FirstSource from Outperform to Neutral Amid Market Challenges

Wedbush downgrades Builders FirstSource (BLDR) from Outperform to Neutral, citing sluggish single-family housing starts, declining lumber prices, and potential sales volume challenges extending into 2026. The firm maintains a price target of $145, but does not see any catalysts for price increase. Builders FirstSource has a revenue growth of 12.1% over the past three years, with total trailing twelve-month sales reaching $15.94 billion.

Wedbush Securities has downgraded Builders FirstSource Inc. (BLDR) from "Outperform" to "Neutral" following a review of the company's outlook in the housing market. The downgrade is primarily attributed to subdued housing starts, elevated home inventories, and declining lumber prices. The analysts at Wedbush, led by Jay McCanless, have adjusted their 2025 revenue forecast to $15.2 billion, a $400 million decrease from their previous estimate, and anticipate a 12% year-over-year decline in Q3 sales Builders FirstSource downgraded at Wedbush on weak housing outlook^[1].

The core market for Builders FirstSource, single-family housing, has shown signs of weakness. Through July, single-family housing starts were down 4% year-over-year, and permits fell by 6%. Forecasters now expect starts to contract by 7% in 2025, with only a modest 2% recovery anticipated in 2026. Mortgage rate volatility is cited as a key factor slowing the market Builders FirstSource downgraded at Wedbush on weak housing outlook^[1].

Additionally, high new home inventories and falling lumber prices are putting pressure on the outlook. Lumber prices have not risen as expected after the increase in Canadian import duties, which could weigh on revenue. The firm is projecting sales of $3.7 billion and adjusted EBITDA of $401 million for the third quarter, both figures below consensus estimates Builders FirstSource downgraded at Wedbush on weak housing outlook^[1].

Despite some benefits to margins in fixed-price products like trusses and millwork, McCanless cautioned that lower commodity prices and weaker volumes could offset these gains. The analysts maintain a price target of $145, valuing the stock at 12.6 times its 2025 adjusted EBITDA estimate. They believe Builders FirstSource may face negative trends on the volume side and on the pricing front, with limited catalysts and a challenging backdrop Builders FirstSource downgraded at Wedbush on weak housing outlook^[1].

Builders FirstSource has seen revenue growth of 12.1% over the past three years, with total trailing twelve-month sales reaching $15.94 billion. Despite the downgrade, the general consensus from 21 brokerage firms gives Builders FirstSource an average brokerage recommendation score of 2.2, classified as "Outperform" Builders FirstSource (BLDR) Downgraded as Housing Market Weakens^[2]. The estimated GF Value for Builders FirstSource is $138.01, suggesting a potential downside of 1.1% from the current trading price Builders FirstSource (BLDR) Downgraded as Housing Market Weakens^[2].

References
Builders FirstSource downgraded at Wedbush on weak housing outlook^[1] https://seekingalpha.com/news/4494994-builders-firstsource-downgraded-at-wedbush-on-weak-housing-outlook
Builders FirstSource (BLDR) Downgraded as Housing Market Weakens^[2] https://www.gurufocus.com/news/3108381/builders-firstsource-bldr-downgraded-as-housing-market-weakens