On Friday, Truist Securities maintained a Hold rating on ABM Industries (NYSE:ABM), with a consistent price target of $55.00. The firm's analysis indicated a slight reduction in fiscal year 2025 EBITDA estimates, by approximately 1%, to better align with trends in different business segments.
This adjustment takes into account a rebalancing of clients in Manufacturing & Distribution (M&D) during the first half of the year and more challenging comparative figures in the Education sector.
The firm also noted positive signals in office space vacancy rates and the return-to-office (RTO) movement, which could signal stabilization in ABM's Business & Industry (B&I) segment by fiscal year 2025. The B&I segment, which accounts for roughly 49% of ABM's total revenue, is expected to benefit from these trends.
Despite these optimistic indicators, Truist Securities remains cautious, opting to stay on the sidelines with ABM Industries. Their decision is influenced by the projection of modest earnings per share (EPS) growth of about 3% for fiscal year 2025. Additionally, the valuation of ABM Industries is currently tracking 7% higher than its five-year average multiple, contributing to the firm's reserved stance on the stock.
Truist Securities' position reflects a careful approach, acknowledging both the slight adjustments in financial projections and the potential for a turnaround in a key revenue-generating segment of ABM Industries. The firm's outlook remains watchful, with no immediate changes to its rating or price target for ABM Industries.
In other recent news, UGI (NYSE:UGI) Corporation has expanded its Board of Directors with the addition of Melanie Ruiz and David Bingenheimer. This strategic move aims to enhance the company's governance and oversight capabilities. Simultaneously, ABM Industries has successfully resolved a class action lawsuit and related legal actions, enabling the company to concentrate on its core business operations.
The company has also seen an upward revision of its full-year 2024 earnings per share (EPS) forecast following a strong fiscal third-quarter report. This performance prompted Truist Securities and Baird to raise their price targets for ABM Industries, while maintaining their respective Hold and Neutral ratings. ABM Industries has also raised its full-year adjusted EPS guidance to a range of $3.48 to $3.55, reflecting confidence in its continued growth trajectory.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Truist Securities' analysis of ABM Industries. The company's market capitalization stands at $3.27 billion, with a P/E ratio of 21.22, indicating a moderate valuation relative to earnings. ABM's revenue for the last twelve months as of Q3 2024 reached $8.27 billion, with a modest growth of 3.25% year-over-year.
InvestingPro Tips highlight ABM's commitment to shareholder returns. The company has maintained dividend payments for an impressive 54 consecutive years, demonstrating long-term financial stability. This aligns with Truist Securities' cautious but steady outlook. Additionally, management has been aggressively buying back shares, which could potentially support the stock price.
However, ABM faces challenges with weak gross profit margins, as noted by InvestingPro. This corroborates Truist Securities' conservative stance and their projection of modest EPS growth. For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for ABM Industries, providing a deeper understanding of the company's financial health and prospects.
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