Truist Securities analyst Keith Hughes reiterated a Buy rating on the shares of Floor & Decor Holdings Inc FND and raised the price target from $97 to $102.
The analyst writes that the flooring industry, being one of the early ones to see a unit contraction, will also rally first, given that demand trends can change very quickly.
The analyst notes that the flooring industry, absent a macroeconomic stimulus, would run at 3% unit growth but is running below the natural rate of demand by roughly 7%, which will turn up when consumer confidence in flooring turns.
The analyst raises the 2024 EPS estimate to $2.08 from $2.02, assuming better early year gross margins offset by more store openings later in the year.
Expecting a turn in business in 2H24, the analyst notes that store openings could drive an exceptionally strong 2025, coupled with a demand recovery.
A turn in sales will first put those with inventory in a better position to capitalize with consumers, says the analyst.
While the product availability and good prices have been understood for some time on FND, the analyst writes the store level service has been overlooked by some investors.
In the analyst’s view, Floor & Decor’s growth story remains unchanged, with many years of store growth and market share gains in its existing base.
Price Action: FND shares are trading higher by 1.10% at $90.78 on the last check Monday.
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