Investing.com – Raymond James lowered its price target on CDW Corporation (NASDAQ:CDW) to $150 from $190 while maintaining a Strong Buy rating on the stock. The shares currently trade at $107, near their 52-week low of $113, and InvestingPro analysis suggests the stock is undervalued relative to its Fair Value.
The firm cited the company’s first-quarter results, which showed mid-single-digit gross profit dollar growth year-over-year but limited operating leverage. Earnings before interest and taxes rose in the low single digits year-over-year and missed the firm’s estimate.
Raymond James noted that poor contribution margin over the past year has correlated with valuation multiple compression for CDW. The company’s gross profit margin of 21.73% reflects ongoing margin pressures, an issue highlighted in InvestingPro analysis, which offers 12 additional ProTips and comprehensive Pro Research Reports for deeper insights into CDW’s financial health. The firm said a new initiative announced by the company creates a path to low-to-mid-single-digit EBIT growth on incremental cost savings alone.
The firm said a constructive spending environment with good capital allocation could create a path back to double-digit earnings per share growth. CDW previously traded at a price-to-earnings ratio above 20 times during periods of double-digit EPS growth.
CDW currently trades at approximately 10 times price-to-earnings and will likely remain in this valuation range until management demonstrates improved operating trends, Raymond James said.
In other recent news, CDW Corp reported its first-quarter 2026 earnings, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $2.28, slightly above the forecasted $2.26. CDW also reported revenue of $5.7 billion, exceeding projections by $240 million. Despite these positive financial results, the company’s stock experienced a decline in pre-market trading, which is attributed to broader market trends and ongoing supply chain challenges. These developments highlight the complexity of current market conditions impacting CDW. No recent analyst upgrades or downgrades have been reported for the company. Investors are closely monitoring these factors as they assess CDW’s future performance.
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