Valmont Industries (VMI) is seeing improving pricing in its North America utility business, though higher steel and zinc costs are prompting revised near-term estimates, Oppenheimer said Friday in a report.

Valmont is seeing stronger pricing, with increases that outpace cost inflation, supported by firm demand and the company's ability to pass through adjustments, the report said. Oppenheimer noted this is meaningful because the company's 2029 goal for $1 billion in incremental North America utility sales is expected to come mostly from higher volumes rather than improved terms.

Substation demand tied to AI data centers remains "very strong" and carries accretive margins, though it is not a major contributor to the 2029 sales target, the report said.

Oppenheimer lowered H2 estimates to reflect continued cost escalation in steel and zinc since the end of Q2. It expects improved pricing to help absorb these pressures, with some delay given Valmont's large utility backlog. Volume and operating leverage should support results, though the analysts see room for modest margin adjustment.

Agriculture demand shows no meaningful change during the current harvest season, and Oppenheimer maintains "reserved" expectations for the segment through 2028.

Oppenheimer maintained its outperform rating on Valmont and its $600 price target.

Price: 467.44, Change: -1.26, Percent Change: -0.27