WD-40 stock price target lowered to $300 at DA Davidson on currency trends

WD-40 (WDFC) reported strong third-quarter fiscal 2025 results, with diluted EPS of $1.54 surpassing analyst expectations despite a slight revenue miss at $156.9 million. The company achieved a record sales quarter with 1% year-over-year net sales growth and improved gross margins to 56.2%, driven by strong performance in the Americas and Asia-Pacific. DA Davidson lowered its price target to $300 from $322 but maintained a Buy rating, citing the solid quarter and increased profitability, while the company narrowed top-line guidance but raised profit expectations for the full year. This underscores WDFC's operational efficiency and financial health, with current trading levels below the revised analyst target suggesting potential upside.

Analysis

WD-40 (WDFC) reported a fundamentally strong third-quarter for fiscal 2025, characterized by robust profitability that overshadowed a slight revenue shortfall. The company's diluted EPS of $1.54 decisively beat analyst expectations of $1.42, driven by a significant expansion in gross margin to 56.2% from 53.1% year-over-year, a result of higher selling prices and lower input costs. While revenue of $156.9 million missed the $160.6 million forecast, it still represented a record sales quarter with 1% YoY growth, as strong performance in the Americas and Asia-Pacific compensated for a decline in the EIMEA region attributed to customer order timing. In response, DA Davidson maintained its Buy rating but lowered its price target to $300 from $322, viewing the company's Q4 guidance as conservative. Reinforcing this positive operational momentum, WD-40 raised its full-year profit guidance to an EPS range of $5.30-$5.60 and projects net sales growth of 6-9%, supported by favorable currency trends and a perfect Piotroski Score of 9 which indicates exceptional financial health.

Key Decisions for Investors

• Investors should consider the disconnect between the minor revenue miss and the significant operational strengths, including the EPS beat and substantial gross margin expansion, which signal strong pricing power and cost management.
• Given the current share price of $224.90, the stock trades at a notable discount to the revised analyst price target range of $270 to $322, suggesting a potential value opportunity if management's raised profit guidance is met.
• It is prudent to monitor sales performance in the EIMEA region in the upcoming quarter to validate that the recent decline was due to temporary timing issues rather than a structural slowdown in demand.
• Consider the analyst view that Q4 sales guidance may be conservative, which could position the company for a positive surprise if the strong start to June is sustained.