Stifel cuts SITE stock price target to $126, maintains hold rating

On Monday, Stifel analysts adjusted their outlook on SiteOne Landscape Supply (NYSE: NYSE:SITE), lowering the price target to $126.00 from the previous $145.00, while keeping a Hold rating on the stock. The decision comes as a response to potential risks in end market demand and the company’s modest acquisition activity since the fourth quarter of 2024. The landscape supply company, currently valued at $5.24 billion, has seen its stock decline by over 21% in the past six months, according to InvestingPro data.

Stifel’s analysts expressed caution regarding the volume prospects for SiteOne Landscape Supply, particularly in light of the company’s upcoming first-quarter results for 2025, scheduled for April 30. The revised forecast incorporates a conservative stance on sales volumes, taking into account the single acquisition SiteOne has completed since its last earnings report. Despite the cautious outlook, InvestingPro data shows the company maintains strong fundamentals with a healthy current ratio of 2.42, indicating robust liquidity.

The analysts highlighted that while they have a more guarded view on sales volume, there is a belief that SiteOne’s pricing potential could provide some support to the firm’s financial outlook and gross margin prospects. However, they noted that these prospects might be limited by deflationary pressures.

In their commentary, Stifel analysts mentioned that the conservative estimates initially provided by SiteOne might offer some support for the current outlook. They anticipate that at minimum, the company will likely indicate performance at the lower end of its full-year 2025 guidance.

Despite the reduced price target, Stifel finds the recent pullback in SiteOne’s stock price and its modest premium compared to its distribution peers to be of interest. The stock currently trades at a P/E ratio of 42.33, with revenue growth of 5.57% in the last twelve months. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering over 1,400 US stocks, the company’s Fair Value assessment suggests slight undervaluation despite current market challenges. Investors and analysts await further insights from the upcoming quarterly results, which are expected to serve as an incremental data point for evaluating the end markets and labor risks that are crucial to SiteOne’s key customers.

In other recent news, SiteOne Landscape Supply Inc. reported its fourth-quarter 2024 earnings, significantly surpassing expectations with an earnings per share (EPS) of $0.48 compared to the anticipated -$0.25. The company’s revenue for the quarter also exceeded forecasts, reaching $1.01 billion against the expected $986.12 million. For the full year 2024, SiteOne achieved a 6% increase in net sales, totaling $4.54 billion, although adjusted EBITDA decreased by 8% to $378.2 million. The company remains committed to its acquisition strategy, having added seven new companies in 2024, contributing $200 million in trailing twelve-month revenue. Looking ahead, SiteOne projects an adjusted EBITDA for 2025 between $400 million and $430 million, with plans to drive organic sales growth and improve gross margins. Analysts from firms like Baird and UBS have highlighted the company’s strategic focus on operational efficiencies and market expansion, noting SiteOne’s efforts to integrate recent acquisitions and optimize its branch network. Despite challenges such as price deflation in key products, the company anticipates steady demand in its end markets and is optimistic about its growth prospects for 2025.

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