Why Investors Ditched Mainstream and Mainstream Stocks This Week

It wasn’t going to be a good few days for Core & Main (CNM 0.13%) shareholders. In the shortened trading week, shares of the specialty industrial company fell nearly 21 percent, according to data compiled by S&P Global Market Intelligence. The most important news from the company during that period was not very encouraging, after all. Neither did the resulting tightening of analysts’ price target cuts.

A quarter to forget

Core & Main, which focuses on products for utilities and large industrial customers, reported its second-quarter earnings on Wednesday before the market opened. The good news was that sales were up nearly 6% (to $1.96 billion) and net income was up 8% to $119 million, or $0.61 per share.

However, discouragingly, both headline numbers came in well below analysts’ average estimates. In addition, Core & Main’s management lowered its full-year revenue guidance. It attributed both the disappointing performance and the guidance change to weather disruptions, among other factors.

Analysts grow gloomier

In the following days, several experts who follow Core & Main shares lowered their expectations for its future. Among them was Truistto Keith Hughes, who now believes the shares are worth $38 each. This is some distance from its previous level of $50.

Hughes maintained his recommendation on Core & Main, writing in a new research note of “unusual” weakness in the company’s crucial municipal customer segment. He also believed that the negative reaction from investors was largely due to the guidance cut and that the market generally expects more cuts in the future.