Core & Main (CNM – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Andrew Obin from Bank of America Securities reiterated a Sell rating on the stock and has a $40.00 price target.
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Andrew Obin has given his Sell rating due to a combination of factors impacting Core & Main’s financial performance. Despite the company’s revenue exceeding expectations in the first quarter, the adjusted EBITDA only met estimates, and both gross and EBITDA margins experienced a year-over-year decline. The company’s reliance on domestically manufactured products and the impact of tariffs have led to price increases, but these have not been sufficient to offset the margin pressures.
Furthermore, while certain end markets like municipal and non-residential sectors show stability, the residential market is showing signs of weakening, particularly with new lot developers scaling back. The expectation of a neutral to slightly positive impact from pricing in 2025 is uncertain, especially if commodity-linked pricing continues its downward trend, which could further pressure gross margins. These factors, combined with a significant gap between the current stock price and the price objective, support the Sell rating.