Group 1 - Wolfe Research upgraded Trex (NYSE: TREX) to Outperform from Peer Perform and set a $47 price target, with shares rising more than 1% in pre-market trading [1] - Trex shares had fallen nearly 50% in 2025, underperforming the broader building products group by approximately 27 percentage points [1] - Wolfe acknowledged investor concerns regarding future market share gains after James Hardie's acquisition of AZEK, but noted that the selloff created an excessive valuation discount [1] Group 2 - Trex was trading at 12.3x Wolfe's 2026 EBITDA estimate, which is a 44% discount to its long-term average multiple and a 53% discount to its 2018–2024 average [2] - Returns had declined as Trex invested in capacity, maintained higher inventory under its even-flow production model, and increased SG&A spending amid muted market growth [2] - Wolfe projected a 16% ROIC in 2026, the second-highest in its coverage universe, and stated that the decking industry's growth profile warranted a premium valuation [2] - The $47 target implies a roughly 15x EV/EBITDA multiple [2]