On Wednesday, Baird analyst David Manthey adjusted the price target for Ferguson Plc. (NYSE: FERG), a leading distributor of plumbing and heating products, to $225 from the previous $230 while maintaining an Outperform rating on the stock. The stock, currently trading at $194.94, has experienced a significant 12.5% decline over the past week.
The revision followed the company's report of October-quarter results that fell short of market expectations. Despite this, Ferguson has upheld its full-year guidance. According to InvestingPro, eight analysts have recently revised their earnings expectations downward for the upcoming period.
The company's first-quarter operating margin, which is typically the highest of the season, did not meet expectations, leading to some investor skepticism regarding the maintained outlook. The shortfall was attributed to slightly higher than anticipated selling, general, and administrative expenses (SG&A) coupled with deleveraging efforts.
Analysts believe that for Ferguson to achieve its full-year guidance, a noticeable improvement in end-market conditions and a strong performance in the fourth quarter of fiscal year 2025 are necessary.
Manthey noted that the near-term challenges are evident, but he reaffirmed a positive medium- to long-term perspective on Ferguson's potential to leverage secular growth drivers. The company's ability to meet its guidance appears to hinge on the anticipated market turnaround and its performance in the latter half of the fiscal year.
Ferguson's commitment to maintaining guidance despite the initial quarter's underperformance suggests a level of confidence in its business strategy and market position. The company's focus on managing expenses and navigating market dynamics will be critical in achieving the expected outcomes for the fiscal year.
The revised price target reflects a modest adjustment in light of the recent quarter's results, yet the Outperform rating indicates that Baird's outlook on Ferguson's stock remains positive.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.