Stifel initiates coverage on Hillman Solutions stock with Buy rating

Investing.com - Stifel initiated coverage on Hillman Solutions Corp (NASDAQ:HLMN), currently trading at $7.77 with a market capitalization of $1.53 billion, with a Buy rating and a $9.50 price target on Monday.

The research firm views Hillman as a share gainer in the home improvement category, expecting mid-single-digit organic revenue growth and double-digit organic EBITDA growth. Stifel also noted the company is positioned to execute synergistic mergers and acquisitions. According to InvestingPro data, the company has demonstrated profitability over the last twelve months.

Stifel pointed out that Hillman shares currently trade at a 33% discount compared to Specialty Distribution peers, with the stock having underperformed since "Liberation Day" (down 14% while the S&P 500 gained 10%).

The firm attributed the underperformance partly to reduced enthusiasm for the home improvement sector, but primarily to concerns about Hillman’s ability to implement pricing strategies that offset tariff inflation.

Stifel’s EBITDA estimates for fiscal years 2025 and 2026 match consensus but are described as potentially conservative, with the firm expecting a recovery in the home improvement category.

In other recent news, Hillman Solutions Corp reported its first-quarter earnings for 2025, meeting market expectations with an earnings per share (EPS) of $0.10. The company’s revenue slightly surpassed forecasts, reaching $359.3 million compared to the anticipated $358.14 million. Hillman Solutions’ adjusted EBITDA increased by 4.2% year-over-year, totaling $54.5 million. The company continues to maintain its full-year net sales guidance of $1.495 billion to $1.575 billion, with a midpoint growth expectation of 4%, and anticipates an adjusted EBITDA of $255 million to $275 million. Despite ongoing challenges, including tariff impacts and supply chain diversification, the company remains confident in its strategic initiatives, such as the rollout of MiniKey 3.5. Analysts from Barclays (LON:BARC) Investment Bank and Jefferies have engaged with Hillman Solutions regarding their strategies to navigate the current tariff environment and potential impacts on margins. The company has reiterated its commitment to managing these challenges through strategic pricing adjustments and supplier diversification. The M&A pipeline remains strong, although acquisitions are on hold until tariff conditions stabilize.

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