Apogee stock price target cut to $47 at DA Davidson

On Thursday, DA Davidson adjusted its outlook on Apogee Enterprises (NASDAQ:APOG), reducing the price target from $62 to $47 while maintaining a Neutral rating on the stock. According to InvestingPro data, the stock is currently trading at $40.08, with a P/E ratio of 8.93, suggesting potential undervaluation. This assessment is supported by InvestingPro’s Fair Value model, which indicates the stock may be trading below its intrinsic value. Brent Thielman, an analyst at DA Davidson, cited affirmation of fiscal year 2026 earnings headwinds as the primary reason for the revision. The new target is based on 12 times adjusted earnings per share (EPS) for fiscal year 2026 and 7 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), compared to the long-term averages of 15 times and 8 times, respectively.

The guidance issued by Apogee reflects both direct and indirect impacts of tariffs, with management actively taking steps to mitigate these effects. Despite recent challenges that have led to a 38% decline over the past six months, InvestingPro analysis shows the company maintains strong financial health with sufficient liquid assets to cover short-term obligations and a healthy current ratio of 1.63. For investors seeking deeper insights, InvestingPro offers comprehensive analysis through its Pro Research Report, available for over 1,400 US stocks. According to Thielman, customers and contractors are showing increased caution in the current environment, which predates the calendar year 2025 tariff implementations. While the end markets for Apogee were not described as overly exuberant before these events, the ongoing uncertainty may still postpone a recovery, which warrants close monitoring.

In the fourth fiscal quarter overview, Apogee reported GAAP EPS of $0.11 per share and adjusted EPS of $0.89 per share, aligning closely with consensus and Davidson’s estimates of $0.87 and $0.88 per share, respectively. Revenue for the quarter was $345.7 million, a 5% decrease year-over-year, with gross profit and EBIT down 16% and 72%, respectively. Adjusted EBIT, excluding restructuring and acquisition costs as well as an arbitration award expense, fell 16% compared to the previous year.

Segment-wise, glass sales dropped 22% year-over-year, or 15% when adjusted for the impact of an extra week in the prior year’s quarter. Despite these challenges, InvestingPro data reveals Apogee’s impressive dividend track record, having maintained payments for 52 consecutive years with a current yield of 2.26%. The company has shown resilience with a strong return on equity of 20% and maintains a conservative debt profile with a debt-to-equity ratio of 0.65. The EBIT margin for this segment came in at 14.6%, reverting to the target range of 10%-15%. The Metals segment, previously known as Framing, saw a 19% decline in sales year-over-year, or a 12% decrease when adjusted for the extra week, due to lower volume and mix. The Services segment, on the other hand, experienced an 11% increase in revenue year-over-year, or 19% when adjusted for the extra week, with an EBIT margin improvement of 390 basis points year-over-year, attributed to a more favorable mix. The Surfaces segment, previously known as LSO, reported a 77% increase in sales year-over-year, which includes the acquisition of UW Solutions in November, although organic sales were slightly down. The adjusted EBIT margin for this segment was down 610 basis points compared to the previous year, with UW Solutions having a dilutive effect on margins while organic volume also weakened.

In other recent news, Apogee Enterprises reported its second-quarter earnings for 2025, revealing earnings per share (EPS) of $0.89, which fell short of analysts’ expectations of $0.92. However, the company exceeded revenue forecasts, reporting $345.69 million compared to the anticipated $336.11 million. Despite the EPS miss, Apogee maintained its full-year net sales guidance between $1,370 million and $1,430 million. The company continues to focus on strategic acquisitions and product launches to drive future growth, with the acquisition of UW Solutions adding $100 million in revenue. Analysts at Sidoti and Company LLC and D.A. Davidson have been closely monitoring the company’s response to new tariffs and the integration of UW Solutions. While these tariffs are expected to impact the company’s earnings, Apogee is taking measures to mitigate these effects. The company’s Performance Surfaces segment is anticipated to experience high single-digit growth, contributing to its strategic investments.

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