William Blair analyst Ryan Merkel has maintained their bullish stance on FERG stock, giving a Buy rating yesterday.
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Ryan Merkel has given his Buy rating due to a combination of factors that highlight Ferguson PLC’s strong performance and strategic positioning. The company reported impressive quarterly results, surpassing expectations in both revenue and EBITDA, which increased by 14% due to improved sales and gross margins. This performance is attributed to Ferguson’s ability to leverage its scale and breadth to gain market share, particularly in the nonresidential sector, which saw a significant 15% growth.
Moreover, Ferguson’s pricing strategy has proven effective, with a 2% price increase that exceeded expectations, suggesting the potential for a 3%-5% price increase over the next year. The company’s guidance for mid-single-digit top-line growth and an adjusted EBIT margin of 9.2%-9.6% aligns with market consensus, providing reassurance to investors. Despite some challenges in the residential sector, Ferguson’s overall execution and strategic focus on large capital projects position it well for continued success, justifying the Buy rating.