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UPDATE: William Blair Downgrades Acuity Brands (AYI) to Market Perform

June 23, 2022 4:43 AM EDT
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Price: $190.78 --0%

Rating Summary:
    11 Buy, 17 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 12 | Down: 16 | New: 15
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(Updated - June 23, 2022 7:16 AM EDT)

William Blair analyst Ryan Merkel downgraded Acuity Brands (NYSE: AYI) from Outperform to Market Perform.

The analyst comments "Acuity should beat Street EPS for the fiscal third quarter, but our lighting survey indicates slower demand next quarter and price inflation may have peaked. Also, our contacts believe the potential removal of tariffs on Chinese lighting products could result in lower market pricing. Given increased uncertainty and our lack of confidence in 2023 EPS estimates, we are downgrading shares to Market Perform. From our survey, distributors and OEMs missed their revenue growth projections for the quarter, price increases moderated,and the forecast for next quarter is for slower growth. Distributors reported 9% growth compared to their forecast for 10%. OEMs reported 8% growth, also below their forecast for 10%. We expect Acuity will outperform our survey by 200-300 basis points due to superior inventory availability, new products, and share gains from Asian importers.Broadly, supply chain challenges persist and backlogs remain elevated. Demand continues to exceed supply as labor and product shortages push out lead times. Only 4% of distributors reported that their backlog is down, indicating they are still challenged in fulfilling this demand. Distributors reported price up 5%, down from 6% last quarter. However, 100%of distributors expect more price increases to be announced in the coming months. Next quarter distributors forecast solid, albeit peaking growth of 9% due to price increases and healthy backlogs. Commentary from OEMs in the survey was more cautious on pricing (tier-2and -3 suppliers selling off inventory) and distributors destocking."

For an analyst ratings summary and ratings history on Acuity Brands click here. For more ratings news on Acuity Brands click here.

Shares of Acuity Brands closed at $155.06 yesterday.


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