Bank of America Securities analyst Andrew Obin reiterated a Sell rating on Core & Main yesterday and set a price target of $40.00.
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Andrew Obin has given his Sell rating due to a combination of factors impacting Core & Main’s financial performance. The company’s third-quarter adjusted EBITDA showed a slight decline year-over-year, and while it marginally exceeded consensus expectations, it fell short of the firm’s own estimates. Despite management’s efforts to drive growth through new branch openings and acquisitions, the downturn in the residential market, which constitutes a significant portion of their revenue, has offset these initiatives.
Additionally, Core & Main is facing challenges with rising rent inflation, which is counteracting their cost-cutting measures. The company has managed to achieve some savings through administrative headcount reductions, but these are being overshadowed by increasing per-location rents. Furthermore, the continued decline in municipal PVC prices is impacting their pricing strategy, despite achieving their highest gross margin in three years. These factors, combined with a stock price significantly above the price objective, support the underperform rating.
CNM’s price has also changed slightly for the past six months – from $58.100 to $55.200, which is a -4.99% drop .