Analyst Andrew Obin from Bank of America Securities reiterated a Sell rating on Core & Main and keeping the price target at $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 second-quarter revenue and adjusted EBITDA fell short of both Bank of America’s and market expectations. Management has also revised downwards its full-year 2025 guidance for revenue and adjusted EBITDA, marking the second consecutive reduction. This adjustment reflects a decrease in residential demand, which constitutes a significant portion of their sales, and a decline in EBITDA margins.
Additionally, there are ongoing cost pressures and higher-than-expected expenses that have affected the company’s profitability. The pricing environment remains challenging, with declines in commodity-linked prices potentially further squeezing gross margins. Specifically, the prices of plastic pipes and fittings have decreased significantly, while iron and steel pipe prices have risen, likely due to tariffs. These factors contribute to a cautious outlook, justifying the Sell rating.