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Investing.com - Stifel raised its price target on Now Inc (NYSE:DNOW) to $19.00 from $17.00 on Monday, while maintaining a Buy rating on the stock. The new target aligns with analyst consensus, as InvestingPro data shows DNOW maintains a "GREAT" financial health score of 3.04, with strong cash position exceeding debt levels.
The price target increase follows Now Inc’s announcement that it has signed an agreement to acquire MRC Global (NYSE:MRC) in an all-stock transaction. The deal values the combined company at approximately $3.0 billion, according to Stifel. DNOW enters this deal from a position of strength, with a current market cap of $1.59 billion and impressive return on invested capital of 10%.
Now Inc expects to generate $70 million of annual cost synergies by the third year following the anticipated close in the fourth quarter of 2025. The company projects 25% earnings per share accretion in 2026 as a result of the acquisition.
Stifel’s analysis supports maintaining a Buy rating on Now Inc shares, reflecting confidence in the strategic benefits of the proposed merger with MRC Global.
The transaction between the two companies was announced after market close on Monday, with MRC Global shares trading at $13.32 at that time.
In other recent news, Now Inc. announced its Q1 2025 earnings, reporting an earnings per share (EPS) of $0.22, surpassing the forecasted $0.18. The company’s revenue also exceeded expectations, reaching $599 million compared to projections of $587.75 million. In a strategic move, Now Inc. revealed an agreement to acquire MRC Global in an all-stock transaction valued at approximately $1.5 billion, including MRC Global’s net debt. This merger is anticipated to create a significant global presence with over 350 service and distribution locations across more than 20 countries. Analysts at Stifel responded to the acquisition by raising Now Inc.’s price target from $17 to $19 while maintaining a Buy rating, citing expected synergies and earnings per share accretion by 2026. The company aims to achieve $70 million in annual cost synergies within three years of closing the deal. Furthermore, the merger has received unanimous approval from both companies’ boards and is expected to close in the fourth quarter of 2025, pending shareholder and regulatory approvals.
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