Building materials stocks, including Vulcan Materials Company (VMC), Martin Marietta Materials (MLM) and Summit Materials (SUM), are trading lower after BofA/Merrill downgraded the group.

WHAT'S NEW: Shares in building materials companies have been on a tear since the U.S. Presidential election last week, on expectations of a boost in infrastructure spending that a Trump presidency will deliver. According to a research report from BofA/Merrill out this morning, shares of Vulcan, Martin Marietta, and Summit are up 12%, 11% and 14%, respectively since the Trump victory. Analyst Timna Tanners said in the research note that her firm was expecting an improvement in the segment prior to the Trump win because of the expected 2017 benefit of the FAST act, which provides the first multi-year highway spending program in a decade. Tanners go on to explain that any further stimulus measures passed in mid-2017, unassumingly under a Trump Presidency, would not result in a benefit to the segment until 2018-2019. The analyst and her firm see Vulcan Materials, Martin Marietta Materials, and Summit Materials as having already had expected robust growth for 2018 priced in and have downgraded the segment to Neutral from Buy. The firm, however, raised its price objective, or PO, on Vulcan to $139 from prior $129. Additionally, the firm raised its PO on MLM to $235 from prior $209, and the PO on Summit Materials hiked to $29. 

OVERHEATED INFRASTRUCTURE STOCKS: According to an article from Barron's out on November 12, the stocks that would benefit from "the massive infrastructure projects that Trump has promised in his quest to make America great again," including Vulcan Materials, Martin Marietta Materials and United Rentals (URI) have moved quite a bit since the Trump win. Citing Michael Block, chief strategist at Rhino Trading Partners, Barron's article noted that even with the anticipated Republican Congress, a Trump Presidency does not automatically translate into a dramatic rise in infrastructure spending. The Barron's article supports one of the aforementioned ideas from the BofA/Merrill research report, noting that a good portion of the segment has been strong prior to the Trump victory, "owing to a highway bill that was passed in November 2015, and the prospect of more government spending next year no matter who won the election."

PRICE ACTION: Shares of Vulcan Materials are down almost 3% to $130.72, Martin Marietta is lower by 3.4% to $221.34, and Summit Materials down by almost 3% to $23.73 per share in afternoon trading.

OTHER INFRASTRUCTURE STOCKS: Other stocks in the segment include CEMEX (CX), Beacon Roofing Supply (BECN), and Eagle Materials (EXP).