FERG Stock Forecast & Price Target

Ferguson Enterprises demonstrates a positive financial outlook due to its robust growth in both residential and non-residential markets, with non-res growth reported at approximately +4% and continued market share gains. The company is benefiting from a solid volume backdrop in its Waterworks segment, alongside strategic expansions in treatment facilities and metering, contributing to revenue growth that may exceed expectations despite facing pricing pressures. Additionally, Ferguson's recent inclusion in U.S. indexes is anticipated to broaden its investor base, further supporting its long-term earnings growth trajectory.

Ferguson Enterprises has indicated a significant decline in its financial outlook, with the adjusted operating margin forecast for FY'25 revised downward to 8.3%-8.8%, a sharp reduction from the previous guidance of 9.0%-9.5%. The company's first-quarter adjusted EBITDA was reported at $502 million, missing estimates and reflecting weakness from end markets, ongoing commodity deflation, and a less favorable product mix impacting gross margins. Additionally, ongoing volume weakness combined with projections of margin erosion have raised concerns regarding the stock's performance, as the revised guidance reflects challenges that investors were not anticipating.