Wells Fargo Downgrades WESCO International (WCC) to Market Perform
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Wells Fargo analyst Allison Poliniak-Cusic downgraded WESCO International (NYSE: WCC) from Outperform to Market Perform with a price target of $45.00 (from $60.00).
The analyst comments "While the company is more balanced today following the integration of utility and datacomm solutions, we still view shares and earnings as largely tied to the performance of the industrial, electrical and construction cycle. Shares are priced below historical levels, and management remains active regarding capital deployment through repurchases and a regular dividend targeted within the next ‘several years’; however, we can’t ignore the continued decline in margins. Electrical lighting products continue to face incremental pressure from foreign-sourced competition. While the market opportunity for LED remains vast, with new builds and retrofits expected to drive further penetration, we believe MRO players like GWW and Amazon have dipped their toe into this market. The result is more business geared towards lager bid-based RFP business, which faces incremental competition from OEM’s going direct. We view this multi-front battle of (1) ecommerce pricing visibility, (2) foreign-soured competition/ limited ‘brand loyalty’ and (3) direct buy OEM trend as capping sales and continuing to pressure margins."
Shares of WESCO International closed at $46.50 yesterday.
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