Tuesday, Baird adjusted its outlook on Pool Corp (NASDAQ:POOL), a company specializing in pool supplies and construction, citing a weaker-than-expected second quarter update. The firm's analyst reduced the price target on the company's shares to $305 from $380, while maintaining a Neutral rating.
The revision follows Pool Corp's business update released after the market closed on Monday, which revealed sales and earnings per share (EPS) significantly below expectations. The company's management also substantially lowered its full-year 2024 guidance, attributing the revision to a continued decline in new pool construction and remodel sales.
The analyst from Baird expressed a cautious approach towards Pool Corp, suggesting that patience is advisable as the market for new pool construction and renovation (R&R) is still trying to stabilize. The statement highlighted that this is another instance where a distributor has reported a negative intra-quarter update, aligning with Baird's previously cautious stance on distributors in this sector.
After the business update was disclosed, Pool Corp's shares showed a substantial decrease in after-hours trading, falling to approximately $300, which represents a double-digit percentage drop. This decline reflects the market's reaction to the company's revised expectations and the broader challenges it faces in the current economic environment.
In other recent news, Pool Corporation's financial outlook has been revised by several firms following its preannouncement of lower-than-expected second-quarter results and a reduction in full-year guidance. Loop Capital lowered its price target for Pool Corp from $370 to $305, maintaining a hold rating.
Similarly, Stephens reduced its price target to $350 from $425, while maintaining an Overweight rating. Baird also adjusted its outlook for Pool Corp, reducing the price target to $380 from $390 and maintaining a neutral rating.
These revisions were influenced by the company's weaker performance in new pool construction and remodeling activities, which are significantly trailing behind earlier projections. The company's Q1 results showed a 7% decrease in net sales, totaling $1.1 billion, and an operating income of $108.7 million.
In other developments, Pool Corporation expanded its board, appointing Kevin M. Murphy as a director. The company also increased its share repurchase program to $600 million and declared a quarterly cash dividend of $1.20 per share, a 9% increase from the previous dividend.
Meanwhile, Southwest Power Pool submitted a request for approval to extend its regional transmission organization services across both eastern and western interconnections, a move anticipated to bring over $200 million in yearly benefits for new western members. These recent developments highlight the ongoing activities within Pool Corporation.
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