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On Monday, Loop Capital Markets adjusted its stance on Atkore International Group Inc . (NYSE:ATKR), downgrading the stock from a "Buy" to a "Hold" rating, and significantly lowering the price target from the previous $115.00 to $65.00. The stock, currently trading near its 52-week low of $62.62, has seen a significant decline of over 55% in the past year. According to InvestingPro analysis, the stock appears undervalued at current levels, trading at a modest P/E ratio of 6.29x. The revision comes amid concerns over the company’s ability to maintain its pricing power in a competitive market with increasing domestic and international competition.
Loop Capital’s analyst has expressed a lack of confidence in a durable pricing floor for Atkore, which has prompted the downgrade. The analyst pointed to several factors contributing to this outlook, including the dramatic increase in competition over the past year, the introduction of new capacity, and rising costs compared to pre-pandemic levels. Recent financial data from InvestingPro shows revenue declined by 12% in the last twelve months, though the company maintains strong liquidity with a current ratio of 3.03.
The report also highlights the uncertainties stemming from headline and governmental risks. The potential for tariffs or import controls could act as a positive catalyst for the stock, but concerns about deportation and its impact on construction activity pose a downside risk, effectively neutralizing the potential benefits without greater clarity. With a beta of 2.12, investors should note the stock’s higher volatility compared to the market. For deeper insights into Atkore’s risk factors and comprehensive analysis, InvestingPro subscribers can access the detailed Pro Research Report, available for over 1,400 US stocks.
Policy shifts in the U.S. regarding electrification and solar investment are also expected to contribute to a demand air gap as customers reassess their plans. Although Atkore is well-positioned to take advantage of various tailwinds, such as infrastructure investment and the Broadband Equity, Access, and Deployment (BEAD) program, the anticipated mega projects are more likely to drive growth in fiscal year 2026. Despite current challenges, the company maintains healthy financials with a gross profit margin of 31.27% and strong return on equity of 25%.
According to Loop Capital’s analysis, Atkore’s EBITDA is not forecasted to return to year-over-year growth until the second quarter of fiscal year 2026. The firm suggests that a more constructive stance on the stock could be considered if Atkore’s pricing shows improvement versus current expectations.
In other recent news, Atkore International Group Inc. has been the focus of several recent analyst reports. RBC Capital Markets reduced Atkore’s price target from $91 to $73, maintaining a Sector Perform rating. The decision followed Atkore’s first-quarter fiscal year 2025 report, which showed operating results that aligned with expectations. KeyBanc Capital Markets also adjusted its outlook on Atkore, revising the price target downward to $80 from the previous $105, while still maintaining an Overweight rating on the company’s shares.
Atkore’s first-quarter earnings per share was reported at $1.63, slightly above the analyst estimate of $1.59. However, quarterly revenue fell short at $661.6 million, compared to the expected $681.12 million. This represents a 17.1% decrease in net sales compared to the same period last year, primarily due to lower average selling prices and reduced sales volume across the company’s product lines.
In other developments, Atkore shareholders approved executive compensation and elected nine directors at the Annual Meeting of Stockholders. The shareholders also ratified the appointment of Deloitte & Touche LLP as Atkore’s independent registered public accounting firm for the fiscal year ending September 30, 2025. Lastly, RBC Capital Markets included Atkore in its ’Naughty List’ for 2024, noting increased competition from Mexico in the electrical steel conduit market.
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