Barclays, Loop Capital Raise Advanced Drainage Systems Price Target After Q2 Results - Advanced Drainage Systems (NYSE:WMS)

Barclays analyst Matthew Bouley raised the price target on Advanced Drainage Systems Inc WMS to $135 (an upside of 8%) from $130 and maintained an Overweight rating on the shares.
Bouley cites stronger pricing dynamics and improving volumes on increased production capacity in Q3 for the target raise. The analyst says A margin recovery is in sight.
Loop Capital analyst Garik Shmois raised the price target to $142 from $127 and maintained a Buy rating on the shares.
The company missed on Q2 margins, but this was "to be expected" considering the "steep" transportation inflation, mentions the analyst.
Shmois adds that volumes were also muted due to the capacity issues, but pricing was up about 30% y/y, and the price/cost ratio was "positive."
Recently, Advanced Drainage Systems reported a Q2 sales increase of 29.8% year-over-year to $706.5 million, missing the consensus of $710.2 million. EPS was $0.88, compared to $0.93 a year ago. Gross profit decreased 2.8%, to $200.1 million.
Adjusted EBITDA decreased 5.3% Y/Y to $164.8 million, and margin declined to 23.3% from 32% a year ago.
Year-to-date cash provided by operating activities was $94.9 million compared to $286.2 million a year ago, and Free cash flow was $31.1 million.
FY22 Outlook: The company expects net sales of $2.550 billion - $2.650 billion (prior view $2.5 billion - $2.6 billion) versus the consensus of $2.56 billion. Adjusted EBITDA outlook is unchanged at $635 million - $665 million.
Price Action: WMS shares are trading higher by 3.05% at $124.37 on the last check Friday.

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