By Paul R. La Monica
QXO, led by billionaire entrepreneur Brad Jacobs, could be inching toward another acquisition as it seeks to roll up the highly fragmented building supplies business. But investors don't appear pleased with how it is building up its M&A war chest.
The company said Friday it was raising a little more than $750 million by selling more than 31.6 million shares at $23.80. That is a discount to the stock's Thursday closing price of about $25.
Shares of QXO, a 2025 Barron's stock pick , fell 4% Friday to about $24.
QXO, which bought the roofing supply company formerly known as Beacon Building Products for $11 billion in 2024, also announced preliminary fourth-quarter sales and earnings after the closing bell Thursday. The numbers were down from a year ago but roughly in line with Wall Street's forecasts.
The company is still off to a hot start to 2026 despite Friday's pullback. Shares are up 24% this month, largely due to hopes that management will soon announce another takeover target. QXO had previously raised $3 billion this month for potential deals, with two separate rounds of financing.
Funds affiliated with Apollo Global Management and other investors said in early January that they would buy $1.2 billion of new convertible perpetual preferred QXO stock. And on Monday, QXO said that Apollo and Temasek, Singapore's sovereign-wealth fund, were leading an investment round to purchase an additional $1.8 billion in preferred shares.
Combined with Friday's stock sale, that is $3.75 billion for dealmaking.
Jacobs also founded United Waste Systems, which was later acquired by Waste Management, as well as equipment-leasing firm United Rentals and the logistics company XPO. He told Barron's last August that the company intended to do more deals tied to the housing and construction markets.
QXO made an unsuccessful offer in 2024 to buy French electrical-components maker Rexel. The Home Depot subsidiary SRS outbid it last year in a battle last year for the drywall distributor GMS.
But analysts think another deal announcement could be imminent, in light of all the new money that QXO is raising through its stock sales.
"We believe QXO's M&A pipeline remains full, including both larger transformative and midsized deals," said Stephens analyst Trey Grooms in a report Friday. Grooms has a $29 price target on QXO, implying a gain of more than 20% from current levels.
RBC Capital Markets analyst Michael Dahl, who has an Outperform rating and $30 price target on QXO, also thinks a deal could be announced soon. But he cautioned investors to not get their hopes up for a large deal. Although there has been speculation that QXO may once again target another publicly traded building supplies company, Dahl isn't convinced.
"We continue to believe that QXO's current active pipeline is more heavily skewed toward private companies," he said in a report Friday.
And regardless of what QXO announces on the M&A front, it is possible that investors have already baked in any acquisition news into the stock price. Truist analyst Keith Hughes said in a report Friday that "a large portion of the next deal may be priced in." In other words, investors may have been front-running a merger announcement, which may mean that the stock won't rally much more once any M&A news is officially announced.
That could be true, but analysts remains upbeat. All 16 that cover the stock have the equivalent of a Buy rating on QXO.
The consensus price target of just above $32 a share is nearly 30% above the current price. Wall Street -- and investors -- are banking on Jacobs' ability to make more acquisitions at compelling prices.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
January 16, 2026 15:15 ET (20:15 GMT)
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