Acuity Brands (NYSE:AYI) stock closed 5.6% lower at $146.36 on Thursday, after William Blair downgraded the lighting and building materials company to market perform, citing increased uncertainty and lack of confidence in 2023 EPS estimates.
William Blair analysts Ryan Merkel and Paul Dircks gave AYI stock a price target of $122, which represents a 16.6% downside to AYI's last closing price.
"Acuity should beat Street EPS for the fiscal third quarter, but our lighting survey indicates slower demand next quarter and price inflation may have peaked," said Merkel and Dircks.
"Also, our contacts believe the potential removal of tariffs on Chinese lighting products could result in lower market pricing," the analysts added.
William Blair's Merkel and Dircks said that they believe price inflation and large backlogs will support continued top-line growth for AYI for the next two quarters. However, they expect sales to decline in 2023.