Downgrading Shares of This Holding as Price Target Upside Shrinks
After a sizable move, we're revisiting our rating for this construction name.
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Over the last few weeks, shares of Vulcan Materials VMC have made a nice run of more than 11%. However, tracing the share price back to the market’s early April low reveals an even more sizable move of more than 29%.
While we are enjoying those gains and the positive impact on the Portfolio, following Vulcan’s June quarter earnings report, we maintained our $310 price target. We also said that, barring fresh data that supported a move to increase that price target in a meaningful way, if VMC shares continued to climb past a certain point, we would have to revisit our One rating.
We are doing just that on Monday, downgrading VMC shares to a Two rating, given less than 10% upside to our price target. To be clear, this move reflects the appreciation thus far in the shares, and while we see more to go, the amount of incremental upside remaining does not warrant adding fresh capital to VMC shares. While we see a gap in the chart near $275, which would offer a low double-digit return, a more compelling point of entry would be after a successful test of the 50-day moving average near $268.
We will continue to evaluate incoming data as it relates to our VMC price target and rating, but should we see VMC shares continue to chug higher, prudent action may be called for.
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At the time of publication, TheStreet Pro Portfolio was long VMC.
