On Monday, Truist Securities expressed continued confidence in Roper Industries (NASDAQ:ROP), maintaining a Buy rating and a price target of $665.00. According to InvestingPro data, the stock currently trades at $508.16, near its 52-week low of $502.10, with analyst targets ranging from $490 to $676. InvestingPro analysis suggests the stock is currently trading below its Fair Value.
The firm's analyst highlighted Roper's potential for improved organic growth in 2025 compared to 2024, as well as the likelihood of revenue and profit boosts from strategic acquisitions. This positive outlook comes despite Roper's underperformance in 2024, where it saw a 5% decline compared to the median 20% return of application software companies and a 29% increase in the Nasdaq.
The analyst's optimism is based on the expectation of stronger organic growth within Roper's Application Software (ETR:SOWGn) segment, including contributions from the Transact acquisition. The company has demonstrated solid performance with revenue growth of 13.02% and maintains a strong financial health score of "GOOD" according to InvestingPro metrics.
Adjustments were made to the 2025 revenue forecasts to more fully account for this acquisition, leading to higher projected adjusted EBITDA and free cash flow (FCF) estimates. The recommendation to buy is supported by the stock's recent weakness and what is seen as a favorable risk/reward balance.
Roper Industries faced challenges in 2024 that affected some of its Network and Tech Enabled Products businesses, leading to a temporary dip in investor confidence. Despite these challenges, the company has maintained dividend payments for 34 consecutive years, with a current dividend yield of 0.66%. InvestingPro subscribers have access to 13 additional key insights about Roper's financial health and market position through exclusive ProTips.
This was evidenced by a notable downgrade in early December when Barclays (LON:BARC) moved Roper's rating from Overweight to Underweight. Despite these hurdles, Truist Securities points to Roper's history of high single-digit organic growth and suggests that investor interest is broadening in various software segments, as well as in AI innovations, citing renewed interest in companies like Salesforce (NYSE:NYSE:CRM).
In other recent news, Roper Industries has reported a substantial 13% increase in total revenue during its third quarter, amassing a total of $1.76 billion. The company also noted a record free cash flow of $719 million, marking a 15% year-over-year rise. Following these developments, Roper Industries raised its full-year 2024 guidance, predicting a total revenue growth of over 13% and an organic growth outlook of approximately 6%.
However, other firms have shown confidence in Roper Industries. Truist Securities increased the price target for Roper Industries to $665, maintaining a Buy rating. Baird also increased the company's stock price target to $652, maintaining an Outperform rating. These adjustments reflect the analysts' optimism about Roper Industries' future performance, driven by its financial resilience and strategic initiatives.
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