Globe & Mail 10:23 AM EDT, 06/07/2021 (MT Newswires) -- Shares of Doman Building Materials Group Ltd. (DBM.TO) rose more than 9% on Monday, continuing a rally that began on Friday after it announced its acquisition of Hixson Lumber Sales.
Vancouver-based Doman, a North American distributor of building materials, said it acquired all of Dallas, Texas-based Hixon's assets for approximately US$375 Million in cash.
Raymond James analyst Steve Hansen raised his price target on Doman shares to $13.50 from $12.25, and maintained an Outperform rating.
"While precise financial data was not provided, our initial impressions suggest this transaction offers a broad range of strategic and financial benefits, including: 1) complimentary scale in attractive, high-growth U.S. markets; and 2) attractive earnings and free cash flow accretion, conservatively estimated by management at more than 55% on normalized earnings," Hansen said in a note to clients.
"Coupled with better-than-expected macro tailwinds in North American housing and building materials markets, we are increasing our target price," the analyst said.
Doman shares rose $0.80, or 9.2%, to $9.46 on the Toronto Stock Exchange.