Pool Corporation ( NASDAQ: POOL ) and Hayward Holdings ( NYSE: HAYW ) shares slumped on Monday as Stifel moved to the sidelines on both names.
Equity analyst W. Andrew Carter advised that recent outperformance for each stock is due to cool off in the near term, arousing some caution. In particular, he told clients that guidance delivered in upcoming earnings reports may surprise to the downside.
“We believe the [POOL] will proceed cautiously given the uncertainty of the current environment with Pentair's initial guidance likely framed by discussions with its largest customer,” he wrote. “During the 3Q22 earnings call, Pool Corp. presented a 2023 scenario including 20% declines in new construction/remodel which we viewed as a worst case scenario likely to frame the low end of initial FY23 guidance. Now, we believe Pool Corp.'s initial FY23 outlook will be anchored to this outlook while also including significant pressure on aftermarket equipment units.”
Despite the downgrade, Carter raised his price target on POOL Corporation ( POOL ) to $360 from $355.
Meanwhile, he also downgraded Hayward Holdings ( HAYW ) and adjusted his price target to $13 from $11.
“We believe it will be difficult to sustain the current valuation against our outlook for a more challenging environment in 2023,” Carter wrote of Hayward. “We believe the company will proceed cautiously given 2022 revisions with guidance/ commentary likely to reflect a HSD U.S. Pool category decline, ceding some market share gained during the COVID-era, an additional destock headwind, continued challenges in Europe, updated expectations likely suggesting a slower margin recovery, and cash flow benefits from achieving targeted working capital levels.”
Shares of Hayward Holdings ( HAYW ) slumped 4.98% while Pool Corporation ( POOL ) slipped 4.31%.
Read more on Deutsche Bank’s recent bullish turn on Pool Corporation .
For further details see:
Pool Corporation, Hayward Holdings plunge as Stifel cuts to hold