On Friday, Vulcan Materials Company (NYSE:VMC) experienced a shift in its stock outlook. JPMorgan (NYSE:JPM) revised the company's rating, moving it from "Overweight" to "Neutral," despite increasing the price target to $270 from the previous $245.
The adjustment comes with an analysis of the company's expected performance, including a 1% increase in EBITDA estimates for 2024/2025 based on stronger margins, now anticipated at 33.4% for the current year.
The revised financial projections also account for a 2% decrease in revenue expectations due to adjusted aggregate volumes, factoring in fewer days in the first quarter, and ready-mix adjustments.
Vulcan Materials is now expected to achieve a 13% rise in EBITDA for the current year, reaching approximately $2.272 billion, aligning closely with the high end of the company's guidance range of $2.15 to $2.30 billion. For 2025, the EBITDA growth is estimated at 6% year-over-year.
The analysis includes an expected 11% year-over-year increase in aggregate prices, despite a projected 1% decline in volumes.
Vulcan's net leverage stands at 1.8 times, and the firm anticipates a free cash flow (FCF) conversion rate of 53% for the fiscal year 2024. The new price target of $270 suggests a 1% downside from current levels and values the company at 15.4 times its estimated 2025 enterprise value to EBITDA (EV/EBITDA).
Vulcan Materials' stock performance has been notable, with a 21% year-to-date (YTD) increase. The company's stock is currently trading at 17.4 times its projected 2024 EV/EBITDA.
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