QXO Inc (NYSE:QXO) shares are plummeting Wednesday after an RBC Capital Markets analyst cut the price target on the stock while maintaining a positive rating. Here’s what you should know.
- QXO stock is at significant support. Why is QXO stock at lows?
RBC Lowers its QXO Price Target to $18
RBC Capital Markets analyst Mike Dahl still holds an Outperform rating, but lowered the price target on QXO to $18 from $27.
Dahl’s checks show roofing sales slipped in the third quarter. Shipments to distributors and sales to customers each fell roughly a high single-digit percentage from a year earlier. Distributors did not clear out inventory as Dahl expected, so stockpiles remain heavy.
Dahl now warns that fourth-quarter shipments could decline from last year, despite an easy comparison. Dahl had previously forecast strong double-digit growth. Elsewhere, residential shingle prices mostly held, and non-residential demand proved sturdier.
RBC Cuts its QXO Revenue and EBITDA Estimates
Those weak readings feed Dahl’s lower forecasts. For the third quarter, Dahl now projects revenue of $4.86 billion, down from $4.96 billion. Dahl’s forecast for EBITDA also fell to $511 million from $618 million. Wall Street expects $4.87 billion in revenue and $549 million in EBITDA.
For the fourth quarter, Dahl cut revenue to $4.14 billion from $4.36 billion and EBITDA to $378 million from $456 million. Wall Street expects $4.37 billion and $440 million.
For 2027, Dahl lowered revenue forecasts to $17.8 billion from $18.8 billion and EBITDA to $1.85 billion from $2.25 billion. Wall Street expects $19.2 billion and $2.22 billion, respectively. Dahl also scaled back expected acquisitions, since QXO needs more time to reduce its debt.
The Case For QXO Over the Long Term
Despite the cuts, Dahl sees QXO as a long-term story. The $18 price target comes from a discounted cash flow model. That model has EBITDA growing at a double-digit annual pace through 2040, mostly through acquisitions. Cash flow from operations and extra borrowing would fund the deals, with no new share sales. Growth slows to 3% once QXO holds about 10% of the $800 billion U.S. and European distribution market that management cites.
Dahl flagged tougher financing, heavier competition for acquisitions, slower ramp-ups at acquired businesses and cyclical end markets as risks.
QXO Shares Are Slipping
QXO Price Action: Qxo shares were down 9.99% at $10.90 at the time of publication on Wednesday. The stock is trading at a new 52-week low, according to Benzinga Pro.
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