On Monday, BofA Securities revised its rating for Ametek Inc . (NYSE: NYSE:AME), upgrading the company's stock from Neutral to Buy and increasing its price target to $225 from the previous $195. The adjustment comes as the analyst anticipates stronger growth for the firm based on macroeconomic tailwinds and potential mergers and acquisitions (M&A) activity.
The analyst highlighted that Ametek has only completed one deal this year, acquiring Virtek Vision with $40 million in revenue, which is significantly lower than its five-year average annual spend of $1.2 billion. This observation suggests there is room for more M&A activity, which could provide upside potential for the company's stock.
Despite Ametek's shares maintaining their value, the analyst noted that the stock's relative multiple is below the average when compared to the S&P 500 industrials index. This underperformance in terms of multiples may offer an attractive entry point for investors.
Looking ahead, the analyst has raised the adjusted earnings per share (EPS) growth forecast for Ametek in 2025 to 10% year-over-year, reaching $7.50, which is 4% above the consensus. This optimistic outlook is supported by the raised price objective, which has been set based on a 20 times multiple of the firm's expected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA), up from the previous 18 times multiple.
The new target multiple represents a modest premium over the 19 times average of Ametek's peers. According to the analyst, this premium is justified given Ametek's proven ability in capital allocation and operational execution, which are seen as key strengths of the company.
In other recent news, Ametek Inc. received an updated price target from KeyBanc Capital Markets, raising it to $215 from the previous $205, while maintaining an Overweight rating.
This adjustment comes in response to the company's third-quarter results in 2024 and the anticipation of a positive turn in many end markets. However, KeyBanc notes that visibility remains limited due to recent political events and initial rate cuts by the Federal Reserve.
Simultaneously, The AZEK Company Inc. reported exceeding its fourth-quarter expectations, with adjusted earnings per share at $0.29, surpassing analyst estimates of $0.27, and revenue at $348.2 million, outpacing the consensus forecast of $339.06 million. This success was largely attributed to the company's residential segment, which saw high-single-digit year-over-year growth in Q4.
Looking forward, AZEK projects a revenue between $1.51 billion to $1.54 billion for fiscal 2025, indicating a 5-7% growth. The company also anticipates an increase in adjusted EBITDA by 5-9% to $400-$415 million. These optimistic forecasts are backed by the company's plans to expand its market opportunity by nearly $2 billion through new product platforms in 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.