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On Monday, Stifel analysts maintained their Buy rating and $16.00 price target for MRC Global (NYSE:MRC) stock, aligning with the strong analyst consensus recommendation shown on InvestingPro. With analyst targets ranging from $16 to $18, the stock shows significant upside potential. They highlighted the company’s tumultuous performance last Friday, noting the stock eventually closed up 3.5%, outpacing the Energy Select Sector SPDR Fund (XLE (NYSE:XLE)), which rose 3.0%. MRC Global’s shares had a volatile start to the day, dropping by as much as 15% due to fourth-quarter 2024 revenue and first-quarter 2025 guidance falling significantly short of expectations.
Despite the initial drop, the company’s management provided some positive insights. They reported that daily order rates and backlog have seen a considerable improvement during the first quarter of 2025. This development is anticipated to lead to revenue growth that exceeds typical seasonal patterns, with the increase expected to materialize in the second quarter of 2025. InvestingPro data shows the company maintains strong financial health with a current ratio of 1.81, indicating solid liquidity to support its growth initiatives.
Furthermore, the issue that caused a delay in the company’s fourth-quarter 2024 report and the filing of its 10-K, which had been a significant concern for the stock, turned out to be of little consequence. The inventory cycle count problem, previously thought to be a substantial headwind for MRC Global, was clarified by management to be a non-material issue.
The analyst’s reiteration of the Buy rating and price target reflects their assessment of the company’s current position and future prospects. MRC Global’s stock performance on Friday showed a strong recovery from its early losses, indicating investor confidence in the company’s ability to address the challenges it faced.
Investors will be watching closely to see if the improvements in daily order rates and backlog during the first quarter will translate into the expected revenue growth in the second quarter of 2025, as indicated by the company’s management. MRC Global’s ability to navigate past the inventory counting issue and provide a clearer outlook may continue to influence the stock’s performance in the coming months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks.
In other recent news, MRC Global Inc. reported its fourth-quarter earnings, revealing a loss of $0.14 per share, which fell short of the $0.10 profit analysts had anticipated. The company’s revenue for the quarter was $664 million, below the expected $734.1 million and reflecting a 10% year-over-year decrease. Despite these results, MRC Global announced a new joint venture with Frisbie Measurement Services to form IMTEC Services, which will focus on providing integrated smart meter technical services for gas utilities. Additionally, MRC Global has sold its Canadian operations to Emco Corporation, marking its exit from the Canadian market and aligning with its strategy to concentrate on core businesses. For the full year 2024, the company reported sales of $3.01 billion and a net income from continuing operations of $78 million, or $0.57 per diluted share. MRC Global also generated $268 million in operating cash flow from continuing operations, the highest since 2015. Looking forward, the company anticipates revenue growth in the low to high single digits for 2025 and plans to execute a $125 million share buyback program. These developments highlight MRC Global’s strategic adjustments and future plans.
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