On Wednesday, Baird downgraded stock of WW Grainger (NYSE:GWW) from Outperform to Neutral. The firm also adjusted the price target for the stock to $975 from the previous target of $1,100.
The revision follows a reassessment of the company's growth trajectory, despite a modest uptick in April's average daily sales (ADS).
The company's ADS in April showed a 5.7% increase, which is an improvement over the first quarter of 2024's growth of 4.9%.
However, Baird noted that the timing of the Easter holiday might have contributed to the April sales figures, suggesting that the growth rate might not fully reflect underlying business trends.
The downgrade by Baird comes as WW Grainger's stock price approached the firm's revised price target. The new target is based on a valuation multiple of 15 times the estimated enterprise value to 2025 earnings before interest, taxes, depreciation, and amortization (EV/2025E EBITDA). This multiple remains constant in Baird's valuation model.
WW Grainger's stock has been under observation for its performance relative to market expectations. The decision by Baird to downgrade the stock to Neutral indicates a view that the stock may not offer significant upside potential relative to the firm's current valuation.
The adjustment in WW Grainger's price target and stock rating is significant information for investors tracking the company's performance. The change reflects the latest available data and Baird's analysis of the company's growth prospects in the near term.
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