Core & Main Inc. (CNM) PT Lowered to $52 at Loop Capital

Loop Capital analyst Jeffrey Stevenson lowered the price target on Core & Main Inc. (NYSE: CNM) to $52.00 (from $64.00) while maintaining a Buy rating.

The analyst commented: "We are maintaining our Buy rating but lowering our PT to $52 (-$12) after CNM reported disappointing 2Q24 results and reduced its FY24 guidance on softer-than-anticipated end-market demand. CNM's 2Q24 organic volumes were negatively impacted by adverse weather and slowing end-market demand fundamentals where the company experienced municipal project delays at the local level and began to see a deceleration in new lot development from the slowdown in single-family housing starts. The 2Q24 miss and a more conservative end-market demand outlook resulted in CNM lowering its FY24 adjusted EBITDA guidance to $900M to $930M ($935M to $975M previously). While the company experienced some sequential improvement in August volumes from pent-up weather demand, it expects a portion of end-market demand will be pushed out into FY25 due to labor constraints and ongoing project delays from higher interest rates. Positively, overall pricing remained stable sequentially during the quarter which management expects to continue in a slowing demand environment since its municipal pipe products are industry-specific categories. In addition, CNM expects to return to gross margin expansion moving forward from its margin initiatives (Ex. private label) since it fully lapped the period of outsized commodity inflation and supply constraints. As a result, we continue to like CNM's heavy nondiscretionary R&R concentration and long-term margin expansion despite a challenging near-term demand environment."

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