Bank of America believes investing in an insulation distributor and installer can earn investors nearly 22% upside. The bank began seeking coverage from TopBuild on Tuesday with a buy rating and a price target of $255. TopBuild shares closed at $209.72 on Monday and are already ahead 32% since the start of 2023. The Daytona Beach, Fla.-based company focuses on energy-efficient insulation, but also provides a more wide of building and construction equipment. The Company’s home services segment helps builders design more energy-efficient homes. According to analyst Rafe Jadrosich, shares of TopBuild are poised to benefit from the company’s growth in residential construction, strong valuation and return on invested capital. Jadrosich added that TopBuild also stands to gain from homebuilders only turning to the most efficient suppliers. BLD YTD mountain TopBuild stock. “We expect TopBuild to outperform the residential construction market (40% market share) by leveraging its superior inventory management and ability to recruit/retain installers in a tight job market,” Jadrosich said. Meanwhile, Jadrosich thinks TopBuild’s efforts to expand further into the non-residential market could fuel further growth in the stock. TopBuild has an 11% market share in commercial insulation and 10% in mechanical insulation, according to the memo. “The non-residential installation market is also consolidating and BLD’s breadth of offerings should drive market share gains from more niche players,” Jadrosich said. – CNBC’s Michael Bloom contributed to this report.