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On Thursday, Bird made a positive adjustment to… American Woodmark (NASDAQ:AMWD) stock, raised its rating from Neutral to Outperform and increased its price target to $120 from $105 previously. The company sees a promising future for the company, citing several factors that could contribute to its growth and financial performance.
The upgrade is based on the expectation that American Woodmark will continue to gain market share, driven by new construction portfolio share gains, distributor expansion, and improvements in service and capacity. Baird expects that these factors, combined with a higher mix of new construction work, will provide the company with a unique growth opportunity.
Baird's analysis indicates the possibility that profits will exceed expectations in fiscal years 2024 and 2025, noting that its estimates are higher than the consensus on Wall Street. The recent reduction in debt has also been highlighted as a positive development, as it may provide the company with more flexibility in deploying capital.
American Woodmark's stock valuation is also attractive, described as “lax” and below historical averages. Baird believes the potential to expand valuation exists, supported by improved end markets, market share gains, and enhanced execution of business strategies.
American Woodmark's risk/reward profile is also favorable, with an estimated near-term price range between $78 and $158. This rating supports Baird's decision to upgrade the stock, reflecting confidence in the company's future prospects.
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