FERG Stock Forecast & Price Target

Ferguson Enterprises has demonstrated resilience in the non-residential market, achieving a growth rate of approximately 4% while gaining market share, positioning itself favorably for continued performance. The company's strong revenue growth prospects are bolstered by solid demand in both residential and non-residential end markets, coupled with ongoing advancements in its Waterworks segment and expansions into treatment facilities and erosion control, which offset pricing pressures. Furthermore, Ferguson's recent inclusion in US indexes is anticipated to broaden its investor base, providing additional support for its earnings growth trajectory and potential for positive re-rating in the market.

Ferguson Enterprises has reported a notable decline in its adjusted operating margin guidance for FY'25, now forecasted to be between 8.3% and 8.8%, a significant drop from the previously anticipated range of 9.0% to 9.5%. The firm's first-quarter adjusted EBITDA of $502 million fell short of market expectations, attributed to margin pressures from weaker end markets and ongoing commodity deflation, which contributed approximately 50-55 basis points to year-over-year headwinds. Furthermore, the company is facing volume weakness and margins are expected to continue eroding, thereby intensifying negative sentiment surrounding the stock in the near term.