Analyst Joseph Michael of Morgan Stanley maintained a Hold rating on Reliance Worldwide Corp., reducing the price target to A$4.35.
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Joseph Michael has given his Hold rating due to a combination of factors impacting Reliance Worldwide Corp. While the company’s FY25 performance was in line with expectations, the guidance for the first half of FY26 fell short, with sales expected to remain flat or decline slightly. The Americas region is anticipated to see a moderate decline in sales, and the overall EBITDA margin is projected to be lower due to reduced volumes and tariff challenges.
Despite these challenges, there are positive aspects such as resilient EBITDA margins, reduced leverage providing capital management flexibility, and progress in integrating Holman. However, ongoing tariff issues and a soft macroeconomic environment, particularly in new home construction and remodeling, pose concerns. The company’s efforts to mitigate tariff impacts and optimize operations have been delayed, leading to uncertainty in the near-term earnings outlook. Consequently, a re-rating is unlikely until there is evidence of successful tariff mitigation and a cyclical recovery.
In another report released on August 12, J.P. Morgan also maintained a Hold rating on the stock with a A$4.50 price target.