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Mohawk Industries' New CEO to Drive Margin Focus and Buybacks, Truist Says

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Mohawk Industries (MHK) could see its valuation re-rate as a new CEO shifts strategic focus toward margin expansion, portfolio pruning and substantial share repurchases, Truist Securities said in a note Tuesday.

The firm said that Mohawk's current valuation reflects perception of secular decline that is not accurate, as LVT flooring's market-share gains, which pressured Mohawk's results for years, have topped out, setting up a recovery across other flooring categories.

Truist said the leadership change, following long-time CEO Jeff Lorberbaum's departure, should also bring greater investor engagement and disclosure.

The firm added that potential divestitures, including a European insulation/ceiling unit, and a recapitalization of Mohawk's low-leverage balance sheet could support buybacks of up to 20% of the company's market capitalization.

Truist maintained Mohawk's buy rating and price target of $155.

Price: $130.41, Change: $-3.22, Percent Change: -2.41%

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