On Thursday, Truist Securities adjusted its stance on shares of Core & Main Inc. (NYSE:CNM), a leading distributor of water, sewer, storm drain, and fire protection products in the United States. The firm reduced the price target on the company's stock to $38.00 from the previous target of $50.00. Despite the significant change in the price target, Truist Securities decided to maintain a Hold rating on the stock.
Core & Main's stock experienced a notable decline of 16% as the company reported earnings that fell short of Wall Street expectations, along with a downward revision of its future guidance.
According to Truist Securities, this performance was not just due to adverse weather conditions but also to a broad weakening of end-user markets. The downturn in municipal markets, which represent a significant segment for Core & Main, is particularly concerning as it is atypical outside of general economic recessions.
The analyst at Truist Securities highlighted that the controversy surrounding the pricing of PVC, a key material for Core & Main's products, did not negatively impact the quarter's results. However, the analyst cautioned that continued market softness could lead to deflation in this area as well as others.
The substantial decrease in Core & Main's stock price, following a period of weakness over the last few weeks, seems to reflect investor anticipation of potential further earnings reductions.
The Hold rating by Truist Securities suggests a neutral stance, indicating that the firm does not necessarily expect Core & Main's stock to outperform the market in the near term. The lowered price target of $38.00 reflects the analyst's revised expectations in light of the recent performance and market outlook for the company.
In other recent news, Core & Main reported mixed second-quarter results, with net sales increasing by 6% to reach $1.96 billion, primarily driven by acquisitions. However, due to lower-than-expected end-market volumes, the company has revised its full-year net sales and adjusted EBITDA projections downwards.
RBC Capital and Baird have both adjusted their outlook on Core & Main shares, lowering the price target to $53.00 while maintaining an Outperform rating. This follows Core & Main's second-quarter results and a reduction in the company's full-year guidance.
Despite the underwhelming performance, both firms anticipate potential positive developments for Core & Main in the longer term. The company also completed several acquisitions and announced two additional ones post-quarter. As part of its growth strategy, Core & Main announced a $500 million share repurchase program and remains optimistic about long-term growth opportunities. These are among the recent developments concerning Core & Main.
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