FERG Stock Forecast & Price Target

Ferguson Enterprises demonstrates a strong outlook primarily due to its resilience in the non-residential market, evidenced by a continued share gain with non-residential growth of approximately 4%. The company's robust performance in various end-markets, including Waterworks and expansions in treatment facilities and metering, is expected to drive revenue growth, underpinned by solid volume and market share gains despite prevailing price headwinds. Additionally, Ferguson's recent inclusion in U.S. indexes is anticipated to enhance its investor base and provide further support for its growth trajectory, contributing positively to its earnings outlook over time.

Ferguson Enterprises has experienced a significant decline in its operational margins, with the adjusted operating margin guidance for FY'25 revised down to 8.3%-8.8%, a notable decrease from the prior forecast of 9.0%-9.5%. The company's first quarter adjusted EBITDA was reported at $502 million, falling short of market expectations, indicating ongoing pressures from weaker end markets and commodity deflation impacting gross margins. Additionally, the anticipated downward trend in gross margin percentage, combined with volume weakness and operational margin erosion, raises concerns about the firm's financial stability and profitability moving forward.