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On Friday, RBC Capital Markets adjusted its outlook on GMS Inc . (NYSE: NYSE:GMS), reducing the company’s price target from $82.00 to $65.00. The stock has already declined 8.4% in the past week and is down 14% year-to-date. Despite the change, the firm maintained its Sector Perform rating on the stock. RBC Capital’s analysts cited a series of factors influencing the decision, including a significant third-quarter miss and a weak guidance for the fourth quarter. According to InvestingPro data, the stock’s RSI suggests oversold conditions, with additional insights available to subscribers.
The analysts at RBC Capital have revised their forecasts, expecting a 9% decrease in GMS’s fiscal year 2025 EBITDA to $496 million. This revision follows weaker than anticipated performance and guidance. The company’s current EBITDA stands at $500.2 million, with an EV/EBITDA multiple of 9x. Furthermore, the firm anticipates a more substantial 20% reduction in fiscal year 2026 EBITDA projections, taking into account factors such as declines in multifamily housing, softer single-family volumes, and more pronounced weakness in commercial sectors as delayed headwinds take effect.
The resilience in wallboard pricing was noted as a positive sign; however, the analysts expressed concerns about increased risks and continued margin pressure. The reassessment by RBC Capital comes after a market selloff that, according to the analysts, has recalibrated expectations and valuation to more accurately reflect the ongoing challenges faced by GMS.
The RBC Capital analyst concluded their commentary by stating, "Net we remain SP as the selloff recalibrated expectations and valuation to reflect ongoing weakness. We lower our PT to $65 from $82 driven by our lower tests." This statement reflects a cautious stance on GMS stock, acknowledging both the recalibration of market expectations and the need to adjust the price target accordingly due to the updated earnings estimates.
In other recent news, GMS Inc. reported its Q3 2025 earnings, revealing an EPS of $1.70, which exceeded analyst expectations of $1.61. However, the company fell short on revenue, reporting $1.3 billion against a forecast of $1.31 billion. Following the earnings announcement, GMS’s stock experienced a notable decline due to the revenue miss and prevailing market challenges. Analysts from Truist Securities and DA Davidson both reduced their price targets for GMS to $80, maintaining Hold and Neutral ratings, respectively. Truist cited concerns over GMS’s market outlook, particularly in the multifamily housing sector, while DA Davidson highlighted volatile performance and pressure on margins. The company’s adjusted EBITDA for the quarter was $93 million, marking a 27.3% year-over-year decline. GMS is facing ongoing challenges in its wallboard distribution segment, with continued pressure on pricing and costs. Despite these challenges, management remains optimistic about a market recovery, with expectations for improved conditions in the coming quarters.
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