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On Wednesday, RBC Capital Markets adjusted its price target for Core & Main Inc. (NYSE:CNM) shares, reducing it to $60 from the previous $62, while maintaining an Outperform rating on the stock. The firm’s analyst noted a slight decrease in the expected EBITDA for fiscal year 2025, now set at $975 million, which aligns with the company’s new guidance following fourth-quarter results.
Core & Main reported robust sales and margin resilience, despite the challenging macroeconomic environment and inconsistent demand patterns. The company’s management provided a solid fiscal year guidance that appears to counteract prior market concerns, indicating sustained sales and pricing strength. Furthermore, gross margin percentages are anticipated to improve as the year progresses.
The guidance provided by Core & Main does not take into account potential tariff impacts, which the analyst suggests could offer additional pricing benefits later in the year. RBC Capital sees Core & Main as having a relatively stable adjusted EBITDA trajectory and believes in the company’s long-term value creation opportunities.
The analyst’s commentary highlighted the company’s performance and outlook, stating, "Our FY™25 EBITDA edges down -1% to $975 MM, at the midpoint of the new guide, following F4Q results that showed continued resiliency in sales and margin despite ongoing macro/demand choppiness. Mgmt.’s FY guide came in solid vs. fears and suggests recent sales/price resilience continues, while GM% improves through the year. Tariff impacts are not included in guidance but could create upside to price later in the year. We see a relatively resilient Adj. EBITDA trajectory for CNM and continue to like its LT value creation opp. We remain OP, adjust PT to $60 ($62 prior)."
The new price target reflects a modest adjustment in response to the recent financial results and forward-looking statements from the company. Core & Main specializes in supplying products for water, wastewater, storm drainage, and fire protection projects, serving contractors, municipalities, and industrial customers across the United States.
In other recent news, Core & Main Inc. reported its fourth-quarter 2024 earnings, showing revenue of nearly $1.7 billion, slightly above the anticipated $1.68 billion. However, earnings per share (EPS) came in at $0.33, which was below the forecast of $0.36. The company maintained stable gross margins at 26.6% and generated strong operating cash flow of $621 million. For fiscal year 2025, Core & Main projects revenues between $7.6 billion and $7.8 billion, aligning closely with market expectations. The company’s guidance also forecasts adjusted EBITDA ranging from $950 million to $1 billion.
Analysts from Goldman Sachs adjusted their price target for Core & Main to $56, maintaining a Neutral rating, while Barclays (LON:BARC) kept an Overweight rating with a $65 price target, reflecting differing outlooks on the company’s performance. JPMorgan reiterated its Overweight rating with a $54 target, emphasizing the company’s sales growth and strategic acquisitions. Core & Main’s management anticipates stable to slightly improved gross margins for 2025, driven by enhanced sourcing strategies and private label offerings. The company is also focusing on mergers and acquisitions as part of its growth strategy, having completed 10 acquisitions in the past year.
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