William Blair analyst Ryan Merkel has maintained their neutral stance on HLMN stock, giving a Hold rating on April 16.
Ryan Merkel has given his Hold rating due to a combination of factors impacting Hillman Solutions. The company’s decision to maintain its sales and EBITDA guidance, despite significant shifts in underlying drivers, reflects a cautious outlook. Tariffs have been a major concern, exerting downward pressure on gross margins, which are expected to decrease by 300 basis points. Hillman Solutions plans to counteract this by raising prices to offset the tariff impact, but this move is expected to lead to volume headwinds, with market volumes projected to decline significantly.
Additionally, the company’s sourcing strategy is undergoing changes, with a reduction in exposure to China and a shift towards alternative sources in India and Southeast Asia. While management remains optimistic about new business opportunities and expects a 2% growth from these wins, the overall financial landscape remains challenging. The withdrawal of the free cash flow guidance, replaced by a net debt-to-EBITDA target, further underscores the cautious stance. Despite these challenges, Hillman Solutions’ execution is viewed positively, but the structural pressures on gross margins and the softness in repair and remodel markets warrant a Hold rating.
In another report released on April 16, Robert W. Baird also downgraded the stock to a Hold with a $9.00 price target.
Based on the recent corporate insider activity of 40 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HLMN in relation to earlier this year.