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RBC Capital raised its price target on Core & Main Inc. (NYSE:CNM) to $67.00 from $60.00 on Wednesday, while maintaining an Outperform rating on the stock.
The research firm cited stronger first-half volumes, improving pricing trends, and ongoing gross margin resilience as key factors supporting the price target increase. RBC Capital adjusted its fiscal year 2025 EBITDA estimate upward by 1% to $987 million, though this was partially offset by slightly higher SG&A expenses.
RBC Capital noted that Core & Main’s progress on gross margin and pricing is weakening bearish arguments against the company and demonstrating the long-term resilience of its earnings potential. The firm highlighted both inorganic and organic growth opportunities remain solid for the company.
The analyst report acknowledged that recent results and unchanged fiscal year guidance fell short of elevated investor expectations that had developed recently. Despite these near-term challenges, RBC Capital expressed confidence in Core & Main’s position relative to competitors in the current operating and macroeconomic environment.
RBC Capital continues to view Core & Main favorably for its long-term value creation opportunity, which factored into the decision to raise the price target while maintaining the Outperform rating.
In other recent news, Core & Main Inc. reported its Q1 2025 earnings, showing a solid financial performance with an earnings per share (EPS) of $0.52, which met analyst forecasts. The company’s revenue for the quarter reached $1.9 billion, surpassing expectations of $1.85 billion, resulting in a positive surprise of approximately 3.24%. Core & Main also reported a 10% year-over-year growth in net sales, demonstrating robust growth and a strong market position. The company’s full-year net sales guidance remains at $7.6 to $7.8 billion, with adjusted EBITDA expected to range between $950 million and $1 billion.
Additionally, Loop Capital raised its price target for Core & Main to $68, maintaining a Buy rating, while Barclays (LON:BARC) increased its target to $69, keeping an Overweight rating. Both firms expressed confidence in Core & Main’s long-term prospects, citing stable EBITDA and top-line performance. Analysts noted the company’s cautious pricing approach and highlighted potential gains from municipal and infrastructure spending, alongside continued gross margin improvements.
Core & Main plans to open 5-10 new locations in 2025, emphasizing its expansion strategy. The company continues to see steady growth in municipal construction activity, driven by funding from the Infrastructure Investment and Jobs Act. Despite some signs of softening in residential lot development, Core & Main remains well-positioned to capitalize on long-term infrastructure investments.
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