GMS stock price target cut to $80 at Raymond James

On Friday, Raymond (NSE:RYMD) James made a significant adjustment to its price target for GMS Inc . (NYSE:GMS), reducing it from $105.00 to $80.00. The stock, currently trading at $72.04, has declined over 8% in the past week and 14% year-to-date. Despite the lower price target, the firm maintained its Outperform rating on the company’s shares. According to InvestingPro analysis, GMS appears undervalued at current levels, with additional insights available through their comprehensive Pro Research Report.

The adjustment followed GMS’s recent report of a quarter that did not meet expectations, coupled with guidance that fell short of analyst predictions. Stifel analysts cited these factors as the reason for revising their estimates and price target downward. InvestingPro data shows that three analysts have recently revised their earnings estimates downward, though the company maintains a solid financial health score of "GOOD" with particularly strong marks in profitability metrics.

In their remarks, Raymond James analysts acknowledged the current challenges faced by GMS, including macroeconomic and non-recurring headwinds, as well as a negative sentiment among investors. Nevertheless, they expressed confidence in the long-term prospects of the industry. They suggested that the market’s anticipation of continued sales declines is not aligned with the inherent attractiveness of the industry’s fundamentals. The company’s strong fundamentals are evident in its healthy current ratio of 2.3 and robust EBITDA of $500.2 million over the last twelve months.

Raymond James analysts believe the market’s current valuation of GMS reflects an expectation of perpetual sales declines. This perspective, they argue, overlooks the potential for a positive shift in the long term. They see the present situation as an asymmetrically bullish setup for investors who are willing to be patient, indicating a possible upside once the current headwinds subside.

The firm’s maintained Outperform rating suggests that, despite the near-term challenges, Raymond James views GMS as a stock that could outperform the broader market or its sector in the future. This outlook is based on the belief in the company’s capacity to navigate through the present difficulties and capitalize on industry fundamentals.

In other recent news, GMS Inc. reported its Q3 2025 earnings, surpassing EPS expectations with $1.70 compared to the forecasted $1.61, but slightly missing revenue estimates at $1.3 billion against the expected $1.31 billion. Despite the positive earnings per share, the company faces challenges in the construction market, impacting its financial performance. Barclays (LON:BARC), RBC Capital Markets, Truist Securities, and DA Davidson all revised their price targets for GMS Inc., reflecting concerns about the company’s near-term outlook. Barclays cut its target to $71, noting a weak volume forecast and potential pricing pressure. RBC Capital reduced its target to $65, citing a significant third-quarter miss and weak guidance for the fourth quarter, while Truist Securities and DA Davidson adjusted their targets to $80, maintaining a Hold and Neutral rating, respectively.

The company’s fiscal year 2025 EBITDA is projected to decrease by 9% to $496 million, with further declines expected in fiscal year 2026. Analysts from RBC Capital expressed concerns about margin pressure, despite resilience in wallboard pricing. GMS Inc. has initiated cost reduction strategies to align with the current market conditions, aiming for $20 million in annualized savings. The company remains optimistic about a market recovery, with a long-term EBITDA margin target of over 10%. GMS’s management continues to focus on strategic pillars to drive growth and improve profitability, even as it navigates a challenging macroeconomic environment.

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