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On Friday, Barclays (LON:BARC) analyst Matthew Bouley adjusted the price target for GMS Inc . (NYSE: NYSE:GMS), a leading distributor of wallboard and suspended ceiling systems, reducing it to $71.00 from the previously set $80.00. Despite the change in price target, the firm maintained its Equalweight rating on the company’s shares. According to InvestingPro data, the stock has experienced significant pressure, falling 8.4% in the past week and 14% year-to-date, while maintaining a "GOOD" overall financial health score.
Bouley’s assessment points to a challenging near-term outlook for GMS, driven by rapidly deteriorating demand and potential pricing pressure on wallboard, although no signs of price weakening have been observed yet. The analyst also noted that steel, which has been a deflationary pressure over the past quarters, could turn into a tailwind. However, there remains a concern that volume elasticity might offset any benefits from steel inflation. The company maintains strong fundamentals with a healthy current ratio of 2.3 and an Altman Z-Score of 4.69, indicating solid financial stability.
The revised outlook is influenced by a weak volume forecast for the upcoming quarter. According to Bouley, single-family wallboard volumes are expected to be significantly down in the high single digits, multifamily volumes are projected to decrease by 35%, and commercial volumes are softening to a 20% decline. These factors are anticipated to lead to gross margin pressure, although this may be partially mitigated by incremental reductions in selling, general, and administrative (SG&A) expenses.
As a result of these market conditions and company-specific challenges, Barclays has lowered its estimates for GMS Inc. This adjustment reflects the analyst’s caution regarding the short-term performance of the company amid a shifting landscape in the construction materials industry.
In other recent news, GMS Inc. reported its third-quarter 2025 earnings, which showed a mixed performance. The company exceeded earnings per share (EPS) expectations with a reported EPS of $1.70 against a forecast of $1.61. However, it missed revenue estimates, bringing in $1.3 billion compared to the expected $1.31 billion. Analyst firms have responded to these results with adjustments to their outlooks. RBC Capital Markets lowered its price target for GMS from $82 to $65 while maintaining a Sector Perform rating, citing missed earnings and weak guidance for the upcoming quarter. Similarly, Truist Securities reduced its price target to $80 from $97, maintaining a Hold rating due to concerns over GMS’s outlook in the multifamily housing market. DA Davidson also cut its price target to $80 from $94, keeping a Neutral rating, following the release of GMS’s quarterly results. These analyst revisions reflect ongoing challenges in the construction market, with concerns over declining multifamily and commercial sectors impacting GMS’s future earnings projections.
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