On Tuesday, JPMorgan (NYSE:JPM) reiterated a Neutral rating on shares of Pentair (NYSE:PNR), a company listed on the New York Stock Exchange under the ticker NYSE:PNR. The firm's analysis followed Pentair's recent confirmation of its first-quarter and full-year 2024 guidance during their investor day.
Pentair, which has a significant portion of its business in the pool industry, is experiencing stable demand, with no changes in the near term. The company operates on a book and ship model, with half of its sales going to Pool (NASDAQ:POOL) Corp.
This consistency is playing out as anticipated, and while no increase is expected in the second half of the year, a potential decrease in interest rates could provide an upside to their guidance. The company is also working through its inventory and predicts one more quarter of challenging comparisons due to inventory build-up in the first quarter of 2023.
The resilience of consumers, despite persistent inflation, has been noted, although a slight downturn is expected in new pool installations in 2024, with projections of 65,000 to 67,000 compared to approximately 70,000 in 2023. Pentair has implemented a 4% list price increase in its pool segment and anticipates a net realization of around 2%.
On the pump side of the business, well pumps are performing at a low level, correlating with slower growth in rural housing development. The company forecasts a downturn in the first half of the year with a slight recovery in the second half.
Despite slight pressure on the top line at Manitowoc due to tough comparisons, there is an expected uptick at Everpure since it offers more of a replacement product. The larger industrial businesses are holding steady, aided by continued government stimulus spending.
The agricultural segment has not met expectations, and there is no anticipation of a market rebound within the year. In the non-residential sector, certain verticals such as office and apartments are slowing down, whereas data centers, senior housing, and warehouses are showing strength.
Pentair's management highlighted that with the reshoring of manufacturing, distribution markets are also reviving. They are optimistic about penetrating growing end markets and finding new opportunities for expansion.
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