QXO's (QXO) acquisition of TopBuild (BLD) for about $17 billion represents a "huge step forward", reflecting the deal's scale, margin profile and long-term growth potential, Oppenheimer said in a Monday note.
The transaction is expected to be immediately and substantially accretive to earnings. This is supported by TopBuild's roughly 18% adjusted earnings before interest, taxes, depreciation, and amortization margins and an estimated $300 million in synergies by 2030.
The acquisition would expand QXO's addressable market from roughly $200 billion to over $300 billion. It would also strengthen its position in insulation distribution and installation across North America, the report added.
Oppenheimer said the combined company is expected to generate more than $18 billion in revenue and over $2 billion in adjusted EBITDA following the deal's expected close in Q3. This outlook is supported by its margin profile and TopBuild's 2030 outlook for long-term value creation.
The firm maintained its outperform rating on the stock.
Shares of QXO were down more than 8% in Monday trading.
Price: $22.94, Change: $-2.06, Percent Change: -8.24%