UBS maintains Buy on Advanced Drainage Systems, target $115

On Friday, UBS reiterated its Buy rating on Advanced Drainage Systems (NYSE:WMS) shares, maintaining a price target of $115.00. The firm’s analysts anticipate that the price and cost challenges the company has faced will diminish as the fiscal year 2025 progresses into fiscal year 2026. According to InvestingPro data, analyst consensus is notably bullish, with price targets ranging from $146 to $180, suggesting significant upside potential from the current price of $120.04.

UBS predicts a return to trend-like top-line growth for Advanced Drainage Systems in fiscal year 2026. They also expect an adjusted EBITDA margin rebasing from the fiscal year 2025 levels, which UBS estimates at 30.3%. This outlook is supported by the belief that pricing will stabilize, and the company will benefit from an increased mix of Infiltrator and Allied Products, as well as improved manufacturing efficiency. InvestingPro data shows the company maintains strong financial metrics, with a healthy gross profit margin of 38.06% and robust return on equity of 37%.

The positive sentiment from UBS comes after a recent upgrade, where the firm highlighted similar expectations for the company’s financial performance. The analysts underscored their confidence in Advanced Drainage Systems’ ability to navigate the headwinds and emerge with stronger financial metrics. InvestingPro analysis reveals the company’s solid foundation, with a current ratio of 3.21 indicating strong liquidity and a moderate debt level. The company has also maintained dividend payments for 12 consecutive years, demonstrating financial stability.

Advanced Drainage Systems is recognized for its comprehensive suite of water management products and solutions, playing a critical role in the infrastructure sector. The company’s product offerings include a variety of pipes, fittings, and other accessories that are essential for water drainage and sanitation projects.

Investors and stakeholders in Advanced Drainage Systems will be monitoring the company’s performance closely, as it strives to meet the expectations set by UBS analysts for the upcoming fiscal periods. The maintained Buy rating and $115 price target reflect a steady confidence in the company’s strategy and market position.

In other recent news, Advanced Drainage Systems has been a subject of interest for several analyst firms. UBS has maintained a Buy rating on the company’s stock with a $115 target, expecting the company to overcome current price and cost challenges. UBS analysts predict a return to normal growth in fiscal year 2026 and an adjustment in the adjusted EBITDA margin based on the fiscal year 2025 estimates.

In a show of financial strength, Advanced Drainage Systems has declared a 14% increase in its quarterly cash dividend. This move, attributed to the company’s solid balance sheet and substantial cash generation, underscores its confidence in its financial performance and strategic business investments.

KeyBanc Capital Markets adjusted its price target for Advanced Drainage Systems to $180 from the previous $195 while maintaining an Overweight rating on the stock. Despite the reduction, KeyBanc still sees the stock favorably, citing the recent dip in share prices as an opportunity for investors.

Oppenheimer maintained its Outperform rating on Advanced Drainage Systems but reduced the price target from $192.00 to $184.00 following the company’s lower-than-expected financial results for the second quarter of fiscal year 2025 and adjusted full-year guidance. Despite the disappointing earnings miss and guidance reduction, Oppenheimer views the second half of the fiscal year as having lower associated risks and suggests the drop in share price presents an opportune moment for investment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.