On Monday, Canaccord Genuity adjusted its price target for shares of Worthington Industries (NYSE:WOR), increasing it to $64 from the previous $56, while maintaining a Hold rating on the stock. This move follows the company's third-quarter earnings report released after market close last Wednesday.
Worthington Industries reported its first quarter of results since separating from its steel business, which was noted for strong performance indicators.
Despite sales falling short of analyst expectations by approximately 3%, the company demonstrated superior profitability with both gross margin and Adjusted EBITDA margin outperforming consensus estimates by roughly 115 basis points and 350 basis points, respectively.
The improved profitability led to an earnings beat, with adjusted earnings per share (EPS) coming in at $0.80, significantly higher than the consensus estimate of $0.69. The revised price target reflects an increase in profitability estimates based on a pro forma lookback provided by management, as well as a higher target multiple, now set at 12.5 times compared to the previous 11 times.
Canaccord Genuity's decision to retain the Hold rating suggests a wait-and-see approach as Worthington Industries continues to operate as an independent entity post its steel business separation.
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