Valmont stock rating cut to Market Perform at William Blair

On Friday, William Blair analysts downgraded Valmont Industries (NYSE:VMI) from Outperform to Market Perform. The decision comes after a meeting with the company’s management, where concerns were raised about the potential impact of expected tariffs on Mexico on the company’s near-term earnings. According to InvestingPro data, two analysts have recently revised their earnings estimates downward, though the company maintains strong fundamentals with a healthy current ratio of 2.07 and operates with moderate debt levels.

Valmont management expressed increasing caution due to the evolving situation with tariffs. The company’s 2024 10-K filing revealed that its Mexican operations export roughly $230 million worth of steel structures to the United States each year, representing approximately 5.6% of the company’s total revenue of $4.07 billion. The original guidance for 2025, which was issued in February, only accounted for tariffs on the portion of business involving steel sourced from Mexico used to produce structures for the U.S. market.

However, recent discussions with Valmont’s management have highlighted that there is now an expectation that tariffs on Mexico could extend to products made in Mexico using steel sourced from the United States. This development has prompted the downgrade as it introduces a new layer of uncertainty regarding the company’s financial performance.

Valmont Industries has not yet publicly responded to the downgrade. The company’s shares will be monitored closely by investors to see how the market reacts to this new assessment by analysts at William Blair. The impact of the tariffs on Valmont’s operations and whether the company will update its guidance to reflect these concerns remains to be seen.

In other recent news, Valmont Industries reported impressive fourth-quarter 2024 financial results, surpassing analyst expectations with earnings per share (EPS) of $3.84, exceeding the forecast of $3.63. The company’s revenue also outperformed projections, reaching $1.04 billion against an expected $1.01 billion, reflecting strong demand across its business segments. Despite the positive earnings, DA Davidson analyst Brent Thielman downgraded Valmont’s stock rating from Buy to Neutral, maintaining a price target of $380. This adjustment comes amid uncertainties in the broader Agriculture sector, which could impact the company’s future performance. Valmont Industries is actively investing in expanding its manufacturing capacity and research and development to support growth. The company has also launched new products, including the AgSense 365 app and an e-commerce platform, to enhance its market position. Valmont projects net sales between $4.0 billion and $4.2 billion for 2025, with anticipated EPS growth of approximately 5% at the midpoint. The company acknowledges potential challenges in agricultural markets but remains optimistic about continued growth in the utility sector.

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