Citi analyst Anthony Pettinari has maintained their neutral stance on MAS stock, giving a Hold rating yesterday.
Geoff Meacham has given his Hold rating due to a combination of factors affecting Masco’s financial outlook and market position. The report indicates a cautious optimism for Masco’s performance in the first half of the year, with an expected stabilization and subsequent acceleration in the second half. The company’s shares recently outperformed, buoyed by a fourth-quarter earnings beat and a forecast suggesting a demand recovery throughout the year. Meacham has adjusted the fiscal year 2024 estimates to reflect improved volumes and productivity, with a particular note on the possible expansion of EBIT margins across the quarters for the Plumbing segment. Despite some challenges, such as a downturn in Decorative Architectural (DA) sales and modest margin erosion in the first half, there is anticipation for recovery, leading to an increased target multiple to 13x next twelve months (NTM) EBITDA and a revised target price.
However, the report expresses a more reserved stance on the long-term targets for 2026, especially concerning the DA segment and the overall market share gains in the Professional Paint category. While the Plumbing segment’s EBIT margin targets seem within reach, reflecting the segment’s pricing power and resilience amidst volume declines and deflation, the DA segment targets appear less certain. The report compares Masco’s guidance for Professional sales growth with that of a key competitor, highlighting a discrepancy that could imply challenges in market share gains. This contrast, along with the conservative estimation of Sherwin-Williams’ market dominance compared to Masco’s, tempers the outlook and justifies the Neutral rating, indicating that while there is potential for growth and recovery, there are also significant uncertainties that investors should consider.
Pettinari covers the Consumer Cyclical sector, focusing on stocks such as Berry Global Group, Avery Dennison, and DR Horton. According to TipRanks, Pettinari has an average return of 18.7% and a 69.36% success rate on recommended stocks.
In another report released yesterday, Deutsche Bank also maintained a Hold rating on the stock with a $76.00 price target.
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Masco (MAS) Company Description:
Masco Corp. engages in the design, manufacture, marketing and distribution of branded home improvement and building products. It operates through the following business segments: Plumbing Products and Decorative Architectural Products. The Plumbing Products segment includes faucets; plumbing fittings and valves; showerheads and hand showers; bathtubs and shower enclosures; toilets; spas, and exercise pools. The Decorative Architectural Products segment offers paints and coating products; and cabinet, door, window, and other hardware. The company was founded by Alex Manoogian in 1929 and is headquartered in Livonia, MI.
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