WESCO International's Price Target Reduced by Credit Suisse
WESCO International Inc.’s WCC price target was recently lowered by more than 10% to $50 from $56 by Credit Suisse. However, analysts reiterated an Outperform rating on the stock.
The news comes on the heels of WESCO’s announcement that it expects sales to decline 4% to 5% for full-year 2015 and earnings per share in the range of $4.15 to $4.30.
Analysts at the investment firm are concerned about the declining revenues and weak gross margins. Also, the company’s operating cash flow plunged 51.31% year over year to $43.32 million.
Our Take
Over the last 60 days, 7 out of 10 analysts polled by Zacks revised the estimates for the next year to $4.19, down 3%. For the current year, 8 analysts lowered the estimates by 16.2% to $3.84, over the same time frame.
WESCO is one of the largest suppliers and distributors of electrical construction products in the U.S. We believe that acquisitions will remain an important part of the company’s growth strategy and boost the top as well as the bottom line in the near term. Moreover, the company will augment its existing product lines and expand globally, thereby improving the overall market position. Additionally, its cost-cutting initiatives will boost margins, going forward.
However, a slowdown in demand from builders, manufacturers and other industrial customers this year might prove to be the headwinds. Currency is also expected to hurt results, going ahead.
WESCO currently has a Zacks Rank #3 (Hold).
Key Picks in the Sector
Some better-ranked technology stocks in the same space are Mercadolibre, Inc. MELI, Stamps.com Inc. STMP and Avnet, Inc. AVT. While Mercadolibre and Stamps.com sport a Zacks Rank #1 (Strong Buy), Avnet carries a Zacks Rank #2 (Buy).
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