Vulcan Materials Co. shares slumped Tuesday after the asphalt and concrete supplier reported lower earnings and cut its 2008 profit target amid "a prolonged and severe downturn" in the residential construction market.
The Birmingham, Ala., company's stock slid $2.35, or 3.5 percent, to $65.14. In the past year, it has ranged from $60.20 to $122.47.
Vulcan's earnings fell as volumes dropped, hurt "by the downturn in residential construction and less favorable weather" in certain markets.
The residential construction sector has contracted in recent quarters as homebuilders have iced building projects to work through an overhang of existing supply.
Vulcan said it sees no relief this year and lowered its profit forecast. The company said the move reflects a steep downturn in residential construction, weaker contract awards in other markets, higher costs for construction materials and the effect of increasing energy-related costs.
"We view the first quarter as a disappointing quarter with the outlook even more challenging than we had anticipated," KeyBanc analyst Christopher Manuel said in a note to investors. "In the near term, we remain very cautious on both the sector and Vulcan."
He reiterated a "hold" rating on the stock, saying the company has long-term value because of its growing dominance in certain markets.
Citi Investment Research analyst Clyde Lewis said he expects the company to struggle as the economy continues to worsen, which would delay any housing recovery.
"Volumes are likely to continue to fall as residential markets remain weak and other end markets weaken," he wrote.
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