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On Wednesday, UBS analyst John Lovallo adjusted the price target for Ferguson Plc. (NYSE: FERG) to $173, a decrease from the previous target of $193, while maintaining a Neutral rating on the stock. The adjustment comes as Ferguson’s stock has declined 8% in the past week, trading near its 52-week low of $154.09. InvestingPro analysis suggests the stock is currently in oversold territory, with multiple indicators pointing to potential value opportunities. The modification in the price target reflects a valuation based on approximately 15 times the firm’s forecasted fiscal year 2027 earnings per share (EPS), a change from the earlier 18.5 times fiscal year 2026 EPS. For context, Ferguson currently trades at a P/E ratio of 19.3x, with a market capitalization of $31.3 billion and trailing twelve-month EBITDA of $2.91 billion.
The analyst’s decision to revise the price target comes as Ferguson is currently in the second half of its fiscal year 2025. The valuation adjustment also accounts for a reduced earnings multiple, which aims to mirror a slightly lower near-term margin outlook for the company. Following the fiscal second quarter 2025 results, UBS has also reduced its adjusted EPS estimates for fiscal years 2025 to 2027. The new EPS forecasts are now set at $8.70, $9.85, and $11.55, respectively, marking a decrease from the previous estimates.
The tempered EPS projections are primarily a result of more conservative margin expectations as Ferguson navigates through a period of uneven demand and persistent deflationary pressures on commodities. Despite these challenges, UBS anticipates that Ferguson will continue to outperform its markets.
In his commentary, Lovallo noted that while Ferguson is positioning itself for growth, the current stock valuation already seems to incorporate the anticipated near-to-mid term growth opportunities. As such, UBS has chosen to maintain a Neutral stance on Ferguson shares, suggesting a balanced view on the stock’s potential performance in the current market environment.
In other recent news, Ferguson PLC (NYSE:FERG) reported its second-quarter earnings for fiscal year 2025, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.52, falling short of the expected $1.99, while revenue came in at $6.9 billion, below the anticipated $7.09 billion. Despite the earnings miss, Ferguson experienced a 3% year-over-year increase in net sales. The company’s adjusted operating profit declined to $449 million, with the operating margin falling to 6.5%. Ferguson continues its expansion in the HVAC and Waterworks sectors, noting a 17% increase in sales for HVAC and a 10% rise in Waterworks. Analysts from Barclays (LON:BARC) and Jefferies were among those who inquired about the company’s growth investments and the impact of ongoing commodity deflation during the earnings call. Ferguson maintains its projection for full-year sales growth in the low single-digit range and anticipates improved pricing dynamics in the second half of the fiscal year.
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