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On Monday, Loop Capital adjusted its outlook on Builders FirstSource (NYSE: BLDR) shares, reducing the price target to $170 from the previous $190 while retaining a Buy rating on the stock. According to InvestingPro data, the stock has experienced significant volatility, with a 38.5% decline over the past six months, though analysts maintain an optimistic consensus with price targets ranging from $147 to $230. The firm’s analyst, Jeffrey Stevenson, revised the fiscal year 2025 (FY25) projections downward, citing a more cautious stance on the pace of recovery in residential demand. Stevenson noted that year-to-date, there has been deflation in value-added categories such as truss, which has been influenced by supply and demand imbalances in a softer residential market. Despite these challenges, InvestingPro analysis shows the company maintains strong fundamentals with a healthy current ratio of 1.77 and robust gross profit margins of 32.8%.
Builders FirstSource might experience a near-term benefit from the anticipated Canadian lumber tariffs proposed by the new administration. The company predominantly sources its lumber within the United States, and the tariffs are expected to potentially support a price rebound in truss. Stevenson highlighted Builders FirstSource’s strong position in the early cycle, with a focus on single-family residential exposure and sustained margin performance, despite a downturn in multi-family construction.
Loop Capital’s revised earnings before interest, taxes, depreciation, and amortization (EBITDA) forecasts for Builders FirstSource now stand at $374 million for the first quarter of 2025, a reduction of $20 million. The full-year EBITDA predictions for 2025 and 2026 have also been lowered, now expected at $2.1 billion (a $75 million decrease) and $2.305 billion (a $145 million decrease), respectively. These adjustments reflect the impact of adverse weather conditions, weaker single-family demand fundamentals, and continued price deflation in value-added categories experienced year-to-date. For investors seeking deeper insights, InvestingPro offers comprehensive analysis including 10+ additional ProTips and a detailed Fair Value assessment, available in the Pro Research Report, along with extensive financial metrics and peer comparisons.
In other recent news, Builders FirstSource has made headlines with several key developments. The company reported a high single-digit decline in overall sales for the fourth quarter of 2024, with single-family sales down by 7% and multi-family sales decreasing by 29%. Despite these declines, Builders FirstSource’s gross margin exceeded expectations, reflecting the company’s ability to manage margins amid challenging conditions. The company’s full-year 2025 earnings guidance, however, fell short of analysts’ predictions, with adjusted EBITDA projected between $1.9 billion and $2.3 billion, and sales guidance ranging from $16.5 billion to $17.5 billion.
Analyst firms have also adjusted their price targets for Builders FirstSource. Loop Capital Markets lowered their target to $190 while maintaining a Buy rating, citing the company’s exposure to single-family residential markets as a positive factor. Stifel reduced their target to $156 but kept a Buy rating, highlighting the company’s valuation and potential for market stabilization as key considerations. BMO Capital Markets cut their target to $168, maintaining a Market Perform rating and expressing confidence in the company’s management and financial flexibility.
DA Davidson also adjusted their price target for Builders FirstSource to $147, maintaining a Neutral rating. The firm emphasized the company’s focus on digital innovation and installation services as growth drivers, despite a sluggish near-term demand outlook. These adjustments reflect varied perspectives from analysts on Builders FirstSource’s market position and strategic initiatives in light of current economic conditions.
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