Loop Capital cuts BlueLinx price target to $115, maintains buy

On Monday, Loop Capital Markets adjusted its financial outlook for BlueLinx Holdings Inc. (NYSE:BXC), reducing the price target to $115 from the previous $120, while still recommending the stock as a Buy. The adjustment comes amid a period of soft demand in large ticket repair and remodel (R&R) projects and the company’s lower engagement with major public builders, who have been outperforming the broader industry.

BlueLinx remains committed to growing its market share by increasing product lines with key national accounts and expanding its branded product portfolio to new regions. With annual revenue of $2.95 billion and a strong current ratio of 4.85, the company maintains a solid financial foundation for expansion. The company’s strategic focus is expected to position it favorably when residential market sentiment improves, following a return to more normalized earnings levels after a tough couple of years marked by specialty products deflation.

Loop Capital’s analysts have slightly reduced their earnings forecasts for BlueLinx due to year-to-date adverse weather conditions and a more cautious outlook on the recovery of residential demand. The revised EBITDA estimates for the first quarter of 2025 now stand at $19 million, a decrease of $3 million. Furthermore, the full-year EBITDA forecasts for 2025 and 2026 have been trimmed to $112 million and $140 million, respectively, each lowered by $4 million.

Despite the lowered earnings projections, the investment firm recognizes the stock’s attractive valuation, currently trading at less than five times its projected fiscal year 2026 EBITDA. With a P/E ratio of 12.4 and an EV/EBITDA of 5.82, the stock appears undervalued according to InvestingPro Fair Value calculations. This valuation suggests that BlueLinx shares may be well-positioned for growth as market conditions improve. For deeper insights into BlueLinx’s valuation metrics and 15+ additional ProTips, consider accessing the comprehensive Pro Research Report available on InvestingPro.

The company’s strategic initiatives to capture market share, including broadening its product lines and geographic reach, are central to its long-term growth plans. Loop Capital’s maintained Buy rating indicates their belief in BlueLinx’s potential to overcome current market challenges.

In other recent news, BlueLinx reported better-than-expected earnings for both revenue and profit in the fourth quarter of 2024. Despite this positive performance, DA Davidson adjusted its price target for BlueLinx to $119.00 from the previous $137.00, while maintaining a Buy rating. The revision was due to initial market uncertainty over quarter-to-date daily sales, which was later clarified by a positive year-over-year volume trend. DA Davidson analysts highlighted BlueLinx’s significant capital deployment opportunities and successful execution of internal growth initiatives. They also noted the company’s strategic approach to managing its portfolio, which positions it well to navigate market challenges. The firm’s analysts believe that BlueLinx is poised for continued growth, supported by diminishing deflationary pressures and certain inflationary tailwinds in the lumber segment. Despite the price target reduction, DA Davidson remains optimistic about BlueLinx’s prospects, expecting the company’s strategic initiatives and market positioning to drive future success.

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