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Investing.com - UBS raised its price target on Commercial Metals Company (NYSE:CMC) to $66.00 from $62.00 while maintaining a Neutral rating following the company’s agreement to acquire Foley Products Company. The stock, currently trading at $60.69 and near its 52-week high of $64.53, appears fairly valued according to InvestingPro analysis.
Commercial Metals announced on October 16 that it would purchase Foley Products, a precast concrete manufacturer, for $1.84 billion, representing 10.3x 2025 estimated EV/EBITDA or 9.2x after cash tax considerations, which implies an EBITDA of approximately $179 million. InvestingPro data shows CMC maintains a strong financial health score of "GOOD" with a current ratio of 2.78, indicating robust liquidity to support this significant acquisition. Get access to 12 more exclusive ProTips and comprehensive analysis with InvestingPro.
UBS believes the acquisition offers Commercial Metals commercial synergies through geographic overlap in the Southeast region, on top of anticipated cost synergies of $25-30 million, though the firm remains cautious about rebar pricing into 2026 as capacity additions coincide with muted demand. The company’s moderate debt levels and strong cash generation support this strategic move, with a current EV/EBITDA multiple of 9.19x.
The investment bank notes that stable precast pricing, strong cash generation of approximately 75%, and long-term growth potential, combined with tax benefits of around $200 million from Foley, support Commercial Metals’ long-term free cash flow, which UBS estimates will reach approximately $650 million in fiscal year 2027.
These factors justified UBS’s multiple re-rating from 7.2x to 7.5x, resulting in the 6% price target increase, despite some analyst questions about the durability of the 40%+ margins in the precast concrete business.
In other recent news, Commercial Metals Company reported its fourth-quarter 2025 earnings, which surpassed Wall Street expectations. The company achieved an earnings per share of $1.37, exceeding the forecasted $1.35, and reported revenue of $2.1 billion, slightly above the predicted $2.09 billion. Despite this strong financial performance, the stock experienced a decline in pre-market trading. Additionally, Commercial Metals announced plans to acquire two pre-cast concrete solutions companies, Foley and CP&P, for a total of approximately $2.5 billion. This acquisition prompted Morgan Stanley to upgrade the company’s stock from Equalweight to Overweight, raising the price target to $68.00. In contrast, Jefferies downgraded the stock from Buy to Hold, citing valuation concerns as the stock reached year-to-date highs. Jefferies maintained a price target of $70.00, expressing concerns over the company’s debt following the acquisition announcements. These developments reflect a mix of optimism and caution among analysts regarding Commercial Metals’ recent activities.
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