Trex surges after SunTrust upgrades to 'Buy'

Shares of Trex Co. soared Thursday after an analyst upgraded the decking and roofing products maker to "Buy," predicting a recent turnaround effort will yield higher returns.

Trex shares gained $1.43, or 11.9 percent, to $13.48.

SunTrust Robinson Humphrey analyst Keith Hughes raised Trex from "Hold" in a client note, saying a turnaround plan under Chief Executive Robert Kaplan is leading to higher savings and better margins.

Hughes also predicted the company's composite decking segment will continue to gain market share, while higher plastics prices will push out competitors that do not rely on recycled plastic, unlike Trex.

In addition, he said Trex may be able to benefit from the trend toward "green building," thanks to its reliance on recycled plastics and wood for its products.

Trex has seen its earnings wobble in recent quarters. Last month, the Winchester, Va., company said its first-quarter earnings more than doubled to $8.9 million, or 60 cents per share. It posted a loss in the quarter before.

Hughes assigned a price target of $20, implying he expects the stock to gain 66 percent over the next 12 months from Wednesday's close of $61.04. Trex could not immediately be reached for comment Thursday morning.

Shares of Trex have fallen about 36 percent form a 52-week high of $20.91 last July.