JPMorgan Downgrades Frontdoor Inc. (FTDR) to Neutral

JPMorgan analyst Cory Carpenter downgraded Frontdoor Inc. (NASDAQ: FTDR) from Overweight to Neutral with a price target of $40.00 (from $58.00).

The analyst comments: "FTDR faces a gross margin headwind from the 25% blanket tariff on steel/aluminum, and we expect a weaker macro environment to impact the direct-to-consumer channel. We maintain our 1Q estimates, which are in-line with guidance, but we reduce our 2025 revenue and adj. EBITDA from the midpoint to the low-end of guidance. Our revenue cuts are entirely in the direct-to-consumer channel, where we now project 0% growth (below +5% guide). It’s difficult to quantify the precise impact to gross margin on the 25% steel/aluminum tariff (45% in China), but it should be more than the $10M annual headwind from the 25% steel and 10% aluminum tariffs during Trump’s first term. We lower our 2025 gross margin to the low-end of the 51.5-53% guide, which mgmt noted included uncertainty around tariffs but we doubt anticipated this magnitude of disruption. We more materially lower our 2026 gross margin to 50% to account for a full-year of impact. FTDR needs to once again lean on price increases to offset the tariff headwind, but this takes time to flow-through and could be challenging in the current macro environment, especially after healthy price increases in recent years and home warranty member count already in decline. FTDR has executed well in recent years and shares trade at a trough multiple, but we downgrade to Neutral as the company faces a number of headwinds with the combination of tariffs, macro uncertainty, and a still depressed real estate market resulting in organic revenue and profit contraction in 2025 based on our updated estimates."

For an analyst ratings summary and ratings history on Frontdoor Inc. click here. For more ratings news on Frontdoor Inc. click here.

Shares of Frontdoor Inc. closed at $39.64 yesterday.

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