QXO Inc (QXO) PT Lowered to $20 at DA Davidson

DA Davidson analyst Garik Shmois lowered the price target on QXO Inc (NASDAQ: QXO) to $20.00 (from $26.00) while maintaining a Buy rating.

The analyst commented, "We are lowering our estimates and PT to $20 (from $26) with our estimate changes below. Our $20 PT is based on 12x our FY30E EBITDA forecast of $4.5B, assuming 3x leverage and discounting back to present value at 10%. It's another soft quarter in which our below-consensus estimates are moving lower again on weaker-than-expected demand across businesses, mainly residential roofing, TopBuild installation, and Kodiak lumber demand. Gross margin is also skewed to the downside on negative roofing pricing, while EBITDA margin is further squeezed due to higher investment costs as the company is feverishly trying to implement its tech rollout across all branches. However, like we wrote in our initiation, for investors with a shorter-term time horizon, volatility in the shares is likely. For investors with a longer-term horizon, however, we believe the risk/reward is attractive assuming the company can execute toward its stated long-term targets. Getting its tech rollout completed by mid-2027, seeing some market-demand and gross-margin stability, and beginning to leverage SG&A would all be potential catalysts."

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