On Wednesday, BofA Securities analyst increased the price target for Wabtec (NYSE:WAB) to $226 from $225, while reiterating a Buy rating on the stock.
The company, currently trading at $198.10 and showing a remarkable 55.5% return over the past year, is currently trading above its InvestingPro Fair Value. The adjustment follows Wabtec's announcement of acquiring the Inspection Technologies division of Olympus Corp. (TYO:7733), a move valued at approximately $1.78 billion.
Wabtec's recent acquisition is poised to bring in significant revenue and EBITDA margins. The Inspection Technologies division is anticipated to contribute $433 million in revenue in 2024, with an EBITDA of $112 million. This represents a 25.9% margin and is expected to add 4.2% to Wabtec's total 2024 revenues of $10.3 billion.
According to InvestingPro data, the company has demonstrated strong revenue growth with a 9.2% increase in the last twelve months. Additionally, it is projected to increase the revenue of the company's Digital Electronics segment by 56%, from $768 million.
The strategic acquisition is set to enhance Wabtec's financial metrics. The company forecasts that the new division will drive high single-digit revenue growth and contribute positively to EBITDA margins and return on invested capital (ROIC) over time. Moreover, the acquisition is likely to be slightly accretive to earnings per share (EPS) in its first year.
Wabtec has also identified financial benefits that will arise from the acquisition. The purchase price, which equates to 12 times the division's earnings, accounts for various adjustments, including transaction and separation costs, anticipated tax benefits, and estimated cost synergies of $25 million. These synergies are expected to further bolster Wabtec's financial position following the integration of the new division.
Notably, InvestingPro analysis reveals that Wabtec maintains a perfect Piotroski Score of 9, indicating exceptional financial strength. For deeper insights into Wabtec's financials and access to over 30 additional ProTips, consider exploring InvestingPro's comprehensive research report.
In other recent news, Westinghouse Air Brake Technologies (NYSE:WAB) Corporation, also known as Wabtec, has expanded its stock repurchase program by an additional $1 billion. This strategic move reflects the company's broader effort to manage its capital allocation and shareholder value. In other developments, Wabtec appointed Juan Perez to its Board of Directors, demonstrating its ongoing governance and oversight enhancements.
In financial news, Wabtec reported a robust third-quarter performance, with sales surging 4.5% to $2.7 billion compared to the same period last year. The company's adjusted earnings per share (EPS) experienced an approximately 18% year-over-year increase, reaching $2.00. Following these results, Stephens raised its price target on Wabtec to $205.00, up from the previous $190.00.
These recent developments have been accompanied by Wabtec's strong performance in its third-quarter earnings call, which highlighted a 4.5% increase in sales to $2.7 billion compared to the previous year. The company's backlog stood at $7.6 billion, marking a 7.5% rise, with a total multiyear backlog of $22 billion. These updates are part of the recent developments surrounding Wabtec.
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