Baird cuts American Woodmark stock target, keeps Outperform

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Friday, Baird analyst Timothy Wojs adjusted the price target for American Woodmark (NASDAQ:) Corporation (NASDAQ:AMWD), a leading manufacturer of kitchen cabinets and vanities for the remodeling and new home construction markets. The new price target is set at $116, a decrease from the previous $122, while the Outperform rating remains unchanged.

The revision follows American Woodmark’s forecast for fiscal year 2025 EBITDA, which came in slightly below market expectations. Despite the lower guidance, Baird maintains a positive outlook on the company’s shares. The analyst anticipates the stock might experience a drop as the market opens the next day, in response to the EBITDA projection.

Baird’s stance is buoyed by anticipated growth across all of American Woodmark’s sales channels in fiscal year 2025. This optimism persists even in the face of a currently weak remodeling and repair (R&R) market. The firm’s ability to gain market share is cited as a particularly encouraging sign.

The analyst notes that while American Woodmark’s investments in new capacity, engineering, and enterprise resource planning (ERP) systems are expected to suppress margins in fiscal year 2025, these strategic moves are likely to bolster the company’s earnings per share (EPS) in the long term. The projected EPS is approaching approximately $15 per share, which Baird believes is not fully appreciated by the market at this time.

In conclusion, Baird’s analysis suggests that despite short-term headwinds, American Woodmark’s strategic investments and market share gains, particularly in new construction and mid-to-lower price points, position the company favorably for future growth.

InvestingPro Insights

Following Baird’s revised price target for American Woodmark Corporation (NASDAQ:AMWD), InvestingPro data provides additional context for investors. The company’s market capitalization stands at $1.47 billion, with a P/E ratio of 12.56, indicating that the stock may be trading at a reasonable price relative to its near-term earnings growth. The PEG ratio, which combines the P/E ratio with the expected earnings growth rate, is notably low at 0.23, suggesting potential undervaluation based on future earnings projections.

One of the InvestingPro Tips notes that management has been actively repurchasing shares, a sign that company leadership may believe the stock is undervalued. Additionally, despite analysts expecting a decline in sales for the current year, American Woodmark has been profitable over the last twelve months, and analysts predict profitability will continue this year. With a significant price uptick of 25.81% over the last six months and a return of 71.62% over the last year, the stock has shown strong performance. It’s also worth noting that American Woodmark does not pay a dividend, which may be relevant for income-focused investors.

For those considering a deeper dive into American Woodmark’s financials and future prospects, InvestingPro offers additional tips. By using the coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a total of 11 InvestingPro Tips for a comprehensive investment analysis.

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