GMS Stock Sees Multiple Price Target Hikes After Home Depot’s $4.3B Buyout Of The Building Products Distributor

Multiple brokerages raised their price target on GMS on Tuesday after Home Depot announced that its unit, SRS Distribution, was buying the building products distributor for $4.3 billion.

Barclays raised GMS’ price target to $110 from $95 and maintained its Equal Weight rating, according to The Fly. The brokerage said the deal will be "viewed positively by GMS shareholders" with little pushback, given an attractive deal multiple.

GMS shares were marginally higher in premarket trading on Tuesday. The stock surged nearly 12% on Monday after the Home Depot deal announcement.

Loop Capital analyst Garik Shmois also raised GMS’ price target by $5 to $110 and noted that Home Depot is a great culture fit with President and CEO John Turner and GMS' senior leadership team staying on to lead the company.

Shmois said the deal unlocks significant shareholder value during a time when headwinds from residential and commercial demand have pressured GMS earnings.

The deal is expected to boost Home Depot's offerings to professional contractors. The companies will have a combined footprint across the U.S. and Canada of more than 1,200 locations and a fleet of over 8,000 trucks, according to Home Depot.

Home Depot enjoyed resilient demand from professional contractors at a time when it is facing a slowdown in demand for significant home improvement projects.

Brokerage firm Baird also raised its price target on GMS to $110 from $95 and maintained an Outperform rating, according to The Fly.

Stocktwits data showed that the retail sentiment with respect to the GMS stock has been ‘extremely bullish’ over the last week.

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