What Happened?
Shares of energy and industrial distributor DNOW (NYSE: DNOW) jumped 8.7% in the afternoon session after Susquehanna upgraded its rating on the stock to Positive from Neutral.
The firm set a price target of $16.00 for the company. The upgrade followed the completion of the MRC acquisition. According to the analyst, the deal positioned Now Inc. as a "more formidable energy and industrials solutions provider." This was due to a broader and more diversified range of product offerings in its main markets, which gave the firm a stronger competitive footing.
The shares closed the day at $13.35, up 7.4% from previous close.
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What Is The Market Telling Us
DNOW’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock dropped 8.1% on the news that the company reported third-quarter 2025 financial results that showed a significant drop in profitability, sparking investor concern. Although the company's earnings per share of $0.26 surpassed analyst forecasts, other key figures pointed to weakness. Revenue came in at $634 million, slightly short of the anticipated $635.13 million. More significantly, the company's net profit margin fell sharply to 3.4% from 9.5% in the same period of the previous year. Additionally, the company's free cash flow margin also declined, dropping to 6.2% from 11.9% in the same quarter of the previous year. These signs of contracting profitability appeared to outweigh the positive earnings surprise for investors.
DNOW is up 3.4% since the beginning of the year, but at $13.39 per share, it is still trading 23.9% below its 52-week high of $17.59 from February 2025. Investors who bought $1,000 worth of DNOW’s shares 5 years ago would now be looking at an investment worth $2,216.
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