U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
Investing.com - DA Davidson raised its price target on GMS Inc . (NYSE:GMS) to $83.00 from $80.00 on Friday, while maintaining a Neutral rating on the specialty building products distributor. The stock, currently trading at $104.45, is near its 52-week high of $105.54, according to InvestingPro data, which also shows the company maintains a healthy financial position with a current ratio of 1.91.
GMS shares jumped after the company reported better-than-expected results for its fiscal fourth quarter of 2025, with notable progress on cost-reduction initiatives and steady volume trends, though these remained weaker on a year-over-year basis. InvestingPro analysis reveals that management has been actively buying back shares, demonstrating confidence in the company’s prospects.
The company’s guidance for the first quarter of fiscal 2026 exceeded DA Davidson’s estimates, prompting the research firm to modestly raise its forecasts for GMS.
DA Davidson expressed encouragement that margins appear to have found a bottom for GMS, but maintained caution regarding wallboard price risk given uncertainty about the timeline for a demand recovery in the building materials sector.
The research firm views the current valuation as fair, with GMS shares trading at 8-9 times estimated EBITDA for fiscal 2026, supporting its decision to maintain a Neutral rating despite the price target increase.
In other recent news, GMS Inc. reported its fourth-quarter fiscal year 2025 results, revealing a notable earnings per share (EPS) of $1.29, which exceeded the forecasted $1.11, marking a 16.22% surprise. However, the company faced a revenue shortfall, reporting $1.33 billion against an anticipated $1.43 billion. Despite the revenue miss, GMS implemented $55 million in annualized cost savings, which could help mitigate some of the financial pressures. Analyst firms such as Raymond (NSE:RYMD) James and Stephens have shown confidence in GMS, with Raymond James raising its price target to $90 and Stephens increasing it to $95, both maintaining positive ratings on the stock.
Stephens noted GMS’s better-than-expected quarterly performance, highlighting stronger price and volume metrics despite a 5.6% year-over-year sales decline. The company’s gross margin stood at 31.2%, aligning with guidance, while the adjusted EBITDA margin declined to 8.2%, surpassing expectations. Additionally, GMS has been focusing on expanding its product lines and digital investments, positioning itself to capitalize on future market opportunities. The company’s outlook for the first quarter of fiscal 2026 includes a projected decline in net sales by low to mid-single digits, with adjusted EBITDA expected between $132 million and $137 million.
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