On Thursday, Baird maintained its outperform rating for SiteOne Landscape Supply (NYSE: NYSE:SITE) but lowered its price target to $185 from the previous $190. The adjustment follows the company's release of first-quarter results for 2024, which did not meet expectations. The shortfall in performance was attributed in part to the Street's inaccurate margin predictions.
Despite the weaker-than-anticipated results for the first quarter, which is traditionally a slow period for the company, Baird suggests that the current dip in stock price may present a buying opportunity for investors. The firm emphasizes that the demand outlook for SiteOne Landscape Supply remains steady. Furthermore, it is anticipated that the negative impact of commodity deflation will subside and that the company will be able to achieve better sales, general, and administrative (SG&A) leverage during the busier seasons.
The analyst from Baird highlighted that the first quarter's performance has a minimal impact on the full-year estimates due to its seasonal nature. They also noted that the long-term positive factors of SiteOne Landscape Supply's business model remain intact. These factors include the expected easing of commodity deflation headwinds and the ability to achieve SG&A leverage during peak seasons.
The company's unchanged demand outlook and the potential for improved financial leverage in the coming months were underscored as reasons for maintaining confidence in the stock. Baird's position reflects a view that the fundamental strengths of SiteOne Landscape Supply's business can withstand the temporary challenges presented by the first quarter's results.
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