Barclays raises Core & Main stock price target to $69 from $65

Barclays raised its price target on Core & Main (CNM) to $69 from $65, maintaining an Overweight rating, citing the company's in-line EBITDA and top-line performance, along with reaffirmed fiscal year guidance. Core & Main reported Q1 2025 EPS of $0.52, meeting expectations, and revenue of $1.9 billion, exceeding the $1.85 billion estimate, with net sales up 10% year-over-year; the company expects net sales of $7.6 to $7.8 billion for the year. Analysts anticipate continued benefits from municipal spending and infrastructure projects, with potential gains in 2025.

Analysis

Barclays has revised its price target for Core & Main Inc. (CNM) upwards to $69 from $65, maintaining an Overweight rating, underscoring confidence in the company's long-term prospects. This optimism is supported by Core & Main's Q1 2025 financial results, which featured an in-line earnings per share of $0.52 and revenue of $1.9 billion, surpassing estimates of $1.85 billion and representing a 10% year-over-year increase in net sales. The company has reaffirmed its fiscal year guidance, projecting net sales between $7.6 billion and $7.8 billion and adjusted EBITDA of $950 million to $1,000 million. Despite a slight stock underperformance on Tuesday, attributed to heightened expectations following Ferguson's results, Core & Main had previously outperformed the S&P 500 by 9%. Analysts acknowledge the company's conservative macroeconomic outlook, which anticipates market growth in the first half of the year followed by a decline in the second, and a cautious pricing strategy described as "flat pricing at worst." While first-quarter SG&A expenses were higher than anticipated due to the integration of prior acquisitions, Core & Main is seen as well-positioned for 2025, driven by potential gains from municipal and infrastructure spending, ongoing gross margin improvements, and an active M&A strategy that has seen over 40 acquisitions since 2017. The company also plans to open 5-10 new locations in 2025, signaling continued expansion.

Key Decisions for Investors

• Investors should note the reaffirmed Overweight rating and increased $69 price target from Barclays, which reflect Core & Main's solid Q1 performance, including 10% YoY net sales growth, and its consistent fiscal year guidance.
• Consider monitoring the company's SG&A expense trajectory as it integrates acquisitions and navigates its conservatively projected second-half market slowdown, while also tracking the execution of its M&A strategy and organic expansion through new locations.
• Evaluate the potential for long-term value creation driven by sustained municipal construction activity, benefits from the Infrastructure Investment and Jobs Act, and continued gross margin enhancements, which are expected to support earnings potential into 2025.