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On Wednesday, KeyBanc Capital Markets maintained a positive stance on WESCO International (NYSE:WCC), reiterating an Overweight stock rating and a $245.00 price target. The firm’s analyst, Ken Newman, issued a statement noting that despite WESCO’s fourth-quarter 2024 performance falling short of expectations and a guide that was somewhat disappointing compared to consensus, the share price rose to $186.94. According to InvestingPro data, analyst targets range from $205 to $250, with the stock currently showing signs of being slightly undervalued based on Fair Value analysis.
Newman acknowledged that WESCO’s new outlook for 2025 includes challenges such as unfavorable foreign exchange rates, negative mix impacts, and ongoing pressures from Industrial and Utility customer segments. However, he suggested that the investment community might have anticipated the revised guidance, considering it more realistic and possibly conservative. This perspective is reinforced by preliminary January data showing around a 5% organic increase in ADS trends. InvestingPro analysis reveals the company maintains a strong financial position with a Current Ratio of 2.21, indicating healthy liquidity, while its beta of 2.01 suggests higher market sensitivity.
While KeyBanc has adjusted its estimates to align with management’s new guidance, Newman expressed continued confidence in WESCO as a top "risk-on" investment within their coverage area. He pointed to the potential for WESCO’s earnings per share to reach approximately $19 by 2026 if demand conditions strengthen further in the second half of the year.
The analyst highlighted WESCO’s strengths, including improved organic growth, increasing profit margins, robust free cash flow conversion, and significant involvement in the growing sectors of data centers and electrification. With a P/E ratio of 14.77 and annual revenue of $21.79 billion, InvestingPro data shows WESCO maintains a GOOD overall financial health score. Considering WESCO’s current valuation compared to its peers and historical averages, Newman sees an attractive risk/reward proposition at the current share price, leading to the reaffirmation of KeyBanc’s Overweight rating and $245 price target. For deeper insights into WESCO’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, WESCO International has been in the spotlight due to its fourth-quarter earnings and revenue results. According to Oppenheimer analysts, WESCO’s adjusted earnings per share (EPS) for this period was $3.16, representing a 19% increase, yet falling short of the estimated $3.35. The company’s sales reached $3.50 billion, a slight 0.5% increase, surpassing the organic growth rate of 2%.
These recent developments also include WESCO’s 2025 projections. The company anticipates its adjusted EPS to be between $12.00 and $14.50, a bit lower than Oppenheimer’s estimate of $14.60. WESCO’s sales forecast for the same year is set between $21.8 billion and $22.7 billion, which is slightly below Oppenheimer’s previous estimate of $22.5 billion.
In terms of analyst ratings, Oppenheimer has maintained its Outperform rating on WESCO’s stock, with a price target of $225.00. Despite the recent earnings miss, WESCO’s global data center and broadband solutions businesses have shown strong performance, growing over 70% and 20% respectively compared to the prior year quarter. However, the industrial and utility segments have shown signs of weakness.
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