RPM International Inc (RPM) saw its stock plummet 5.07% in intraday trading on Thursday, following a downgrade in price target by RBC Capital Markets. The firm lowered its target for RPM from $126 to $116, citing headwinds tied to weak housing trends and soft demand in the company's Consumer segment.
According to RBC's Wednesday note, RPM is facing challenges from middle-single-digit raw material inflation, with a projected $75 million impact on the company's financials. Despite these headwinds, the company has taken steps to improve efficiency by consolidating eight plants and reducing inventories, which helped eliminate fixed costs and lift cash flow to $91.5 million.
While RPM's backlog remains strong across most segments, and the company continues to pursue merger and acquisition opportunities, the market reacted negatively to the lowered price target. RBC maintained its sector perform rating on the stock, indicating a cautious outlook for the company in the face of current market conditions. Investors will be closely watching RPM's performance in the coming quarters to see how it navigates these challenges and capitalizes on potential growth opportunities.
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