What Happened?

Shares of workforce housing company Target Hospitality (NASDAQ:TH) fell 55.6% in the morning session after the company announced the U.S. government wants to terminate the existing Pecos Children's Center services agreement. Because of this, the company is pulling its previously issued preliminary 2025 financial outlook. This creates uncertainty, and investors might be getting nervous about whether the company can meet its sales and profit targets.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Target Hospitality? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Target Hospitality’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Target Hospitality and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 12 months ago when the stock gained 17.1% on the news that the company reported strong fourth-quarter results that blew past analysts' revenue expectations. The strong top line performance was driven by the Government segment (benefited from the company's Pecos Children's Center community contract) and growing customer demand in the HFS – South segment. Its operating margin also outperformed Wall Street's estimates. Guidance was also encouraging, with full year 2024 revenue guidance comfortably ahead while the outlook for adjusted EBITDA was slightly above expectations. Zooming out, this was a fantastic quarter that should have shareholders cheering.

Target Hospitality is down 53.4% since the beginning of the year, and at $4.52 per share, it is trading 61.3% below its 52-week high of $11.67 from May 2024. Investors who bought $1,000 worth of Target Hospitality’s shares 5 years ago would now be looking at an investment worth $961.70.

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