FERG Stock Forecast & Price Target

Ferguson Enterprises has experienced notable growth within the non-residential market, showcasing a share gain of approximately 4% while outperforming in both residential and non-residential segments. The company's solid volume performance, along with strategic expansions in areas such as treatment facilities and erosion control, is driving growth, even amid price challenges, indicating a resilient demand and potential for increased revenue. Furthermore, Ferguson's recent inclusion in US indices, coupled with an expanding investor base, adds further support to its earnings growth trajectory and potential market re-rating.

Ferguson Enterprises is facing a negative outlook primarily due to a significant decline in its fiscal year 2025 adjusted operating margin guidance, which has been revised downwards to 8.3%-8.8%, contrasting sharply with the previous range of 9.0%-9.5%. The company reported an adjusted EBITDA of $502 million for the first quarter, falling short of both RBC's and the street's expectations, highlighting persistent challenges in its gross margin percentage attributed to weaker end markets and commodity deflation. Additionally, the ongoing volume weakness and margin erosion are expected to continue impacting performance in the second half of the fiscal year, resulting in investor sentiment becoming increasingly cautious.