Jefferies downgraded Floor & Decor Holdings (NYSE:FND) to Hold from buy in a note Friday, with a new price target of $108, down from $110 per share.
Jefferies analysts told investors in a note that there is a macro/housing risk in the second half of the year.
"With the stock outperforming YTD, a valuation harder to justify, and uncertainty in 2H, we move to the sidelines," they wrote. They explained that the outperformance has been driven by above-average income customers weathering the softer economy better, traction behind the 'soft landing' narrative, and elevated home prices.
However, going forward, they do see some offsets. "Recent foot traffic shows less-worse declines, so we see little risk to (MSD%) comps in 2Q," they added. "That said, a guidance cut feels more likely than not given: 1) delayed impact of higher 30-yr rates, 2) uncertainty re: resumption of student loan obligations, 3) improving inventory at independents as disruption from UFLPA-driven seizures fade."
The analysts acknowledged that "FND has top-tier mgmt., a moat, and compelling initiative," but stated that the downgrade is a call based on the current macro environment.