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On Thursday, Truist Securities maintained its Hold rating on shares of Core & Main Inc. (NYSE:CNM), with a steady price target of $56.00. The firm’s stance comes after Core & Main’s latest earnings report and future guidance were digested by the market. Core & Main’s stock experienced a minor dip of 0.2% on Wednesday, in contrast to the S&P 500 which saw a slight gain of 0.2%. This movement followed the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) falling just short of consensus estimates, along with guidance for 2025 that did not surpass the high expectations of analysts.
The company’s management has forecasted growth in both EBITDA and revenue for the year 2025, building on its impressive 11.03% revenue growth in the last twelve months. Their outlook is based on a neutral pricing environment and end markets that are expected to be flat to slightly positive. Despite the Hold rating, Truist Securities acknowledged that their previous concerns regarding potential deflation in PVC pipe prices have not materialized to a significant extent. InvestingPro analysis shows the company maintains strong financial health with a GREAT overall score and liquid assets exceeding short-term obligations, as evidenced by a healthy current ratio of 2.34.
Keith Hughes of Truist Securities commented on the company’s projections, noting, "Guidance Assumes Modest Growth On Flat Pricing In 2025." He further elaborated on the market’s reaction and the company’s performance, stating that while valuation remains a reason for their Hold position, the anticipated large-scale deflation in PVC pipe prices has not occurred.
Core & Main’s guidance and the subsequent market response highlight the company’s cautious optimism in the face of a stable pricing landscape. Truist Securities’ reiteration of its rating and price target reflects a measured view of the company’s stock, considering the current financial results and the outlook provided by management for the coming years.
In other recent news, Core & Main Inc. reported its fourth-quarter 2024 earnings, revealing revenue that surpassed market expectations, achieving net sales of nearly $1.7 billion, slightly exceeding the forecasted $1.68 billion. However, earnings per share (EPS) fell short, coming in at $0.33 against the anticipated $0.36. The company’s fiscal year 2025 guidance projects revenues between $7.6 billion and $7.8 billion, with an expected EBITDA ranging from $950 million to $1 billion. Barclays (LON:BARC) maintained an Overweight rating with a $65 price target, citing Core & Main’s stable gross margin and slightly exceeded revenue expectations.
RBC Capital Markets adjusted its price target for Core & Main to $60 from $62, maintaining an Outperform rating, and noted a slight decrease in expected EBITDA for fiscal year 2025. Goldman Sachs also revised its price target to $56 while keeping a Neutral rating, with the company’s fourth-quarter adjusted EBITDA of $179 million aligning with consensus estimates. JPMorgan reiterated an Overweight rating with a $54 price target, highlighting Core & Main’s sales growth, which slightly exceeded projections, and a robust cash flow, including a $55 million stock repurchase.
The company anticipates modest growth in fiscal 2025, with a neutral pricing environment and continued investment in municipal infrastructure. Core & Main’s management has indicated expectations of gross margin expansion during fiscal 2025, driven by enhanced sourcing strategies and increased penetration of private label offerings. The company’s strategic approach and recent executive changes, including the transition of the CFO to CEO, are expected to have a neutral impact on the stock, pending further details.
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