GMS stock soared Friday following reports that Home Depot has made a takeover offer for the construction products distributor. Home Depot's offer could spark a bidding war, after QXO submitted a $5 billion proposal earlier this week.
The Wall Street Journal reported that Home Depot made an offer to purchase GMS on Thursday afternoon. The exact price and date of the offer was unknown.
QXO on Wednesday announced that it made a $5 billion proposal for GMS, offering $95.20 per share in cash. The company said it is interested in Tucker, Georgia-based GMS due to its positions in wallboard, ceiling tile and steel framing, as well as its distribution network and exposure to residential and commercial markets.
QXO gave GMS's management team until June 24, 2025 to respond to the offer. The company warned it was prepared to take the bid directly to GMS shareholders.
Analysts React
Truist on Friday morning lifted its price target on GMS stock to 105 from 80 and kept a hold rating on the shares, The Fly reported. The firm notes that Home Depot may be willing to pay more than QXO, which has a history of "one and done" offers.
RBC Capital raised its price target on GMS shares to 92.20 from 65 on Friday to reflect QXO's offer. Analyst Mike Dahl believes the highest probability is a deal close to the initial offer, The Fly reported. RBC kept a sector perform rating on GMS stock.
The firm also kept a sector perform rating on Home Depot stock and maintained its 399 price target following the news. The firm questioned when Home Depot made its offer and whether it's "real or current," but is not surprised the company is interested in GMS. However, Home Depot's takeover might be viewed "slightly negatively" in the near term as it likely dilutes gross margins and prolongs the share buyback pause.
Stock Action
GMS stock rallied 23.8% Friday to 100.27 and rebounded back to December levels.
GMS on Wednesday popped 10.6% on QXO's offer. Shares are now up 18.2% in 2025.
Home Depot ticked up 0.8% Friday, erasing its 0.5% decline on Wednesday. HD stock has declined three weeks in a row, and has trended lower since November.
Home Depot is down 10.1% this year.
QXO surged 5.7% Friday. Shares jumped 11.7% Wednesday on the takeover bid.
QXO is up 49.6% in 2025.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
