Stifel has adjusted the price target for Chart Industries (NYSE: NYSE:GTLS), a manufacturer of highly engineered equipment servicing multiple market applications in energy and industrial gas, to $199 from the previous target of $220, while the firm maintained a Buy rating on the stock.
Chart Industries has been experiencing robust growth and margin expansion across most of its end markets, with new areas of growth emerging. Despite this positive performance, the company has had to revise its guidance downwards multiple times in recent years due to delays in revenue recognition. This pattern has led to a lack of confidence in the company's financial forecasts and has resulted in investor capitulation and compression of the stock's multiple.
The analyst from Stifel notes that Chart Industries shares are trading at lower multiples compared to its competitors, even though the company is believed to have a superior growth profile.
In order to regain investor trust and achieve multiple expansion, the analyst suggests that Chart Industries will need to demonstrate consistent execution over time.
Chart Industries recently announced a record-breaking performance in its Q2 2024 earnings. The company reported a 12% increase in orders to $1.16 billion and an 18.8% rise in sales to $1.04 billion.
Moreover, the company is on track to meet its medium-term financial goals, expecting full-year 2024 sales to range between $4.45 billion and $4.6 billion, with adjusted EBITDA projected between $1.08 billion and $1.15 billion.
Despite this strong performance, the company revised its EBITDA outlook for the full year. However, the RSL segment posted record sales and margins, contributing to a robust free cash flow of about $115 million. Chart Industries also exceeded its commercial synergy targets, expecting $1 billion in synergies in Q3 2024.
InvestingPro Insights
Chart Industries (NYSE:GTLS) appears to be at a pivotal point, as reflected in the recent price target adjustment by Stifel. To provide a clearer picture, let's delve into the latest data and insights from InvestingPro. The company operates under a significant debt burden, which is an important factor for investors to consider. Despite this, analysts expect both net income and sales to grow this year, indicating potential for positive momentum.
InvestingPro Data shows that Chart Industries has a market capitalization of $4.52 billion and is trading at a forward P/E ratio of 36.98, which suggests that investors are optimistic about the company's earnings potential relative to its current share price. The company has achieved a remarkable revenue growth of 70.25% over the last twelve months as of Q2 2024. Additionally, the gross profit margin stands at a healthy 32.42%, which may be attractive to investors looking for companies with solid profitability metrics.
InvestingPro Tips highlight that Chart Industries does not pay a dividend, which could be a consideration for income-focused investors. However, the stock's volatility and the significant drop in price over the last week and three months may present a buying opportunity for those who believe in the company's long-term growth prospects, especially given that analysts predict the company will be profitable this year.
For investors seeking a more comprehensive analysis, there are over 10 additional InvestingPro Tips available, shedding light on various aspects of Chart Industries' financial health and market performance. Those interested in exploring further can find these tips on the InvestingPro platform.
Overall, the insights from InvestingPro suggest that while there are challenges, there may also be opportunities for investors who have confidence in Chart Industries' growth trajectory and are comfortable with the level of risk associated with the stock's current valuation and volatility.
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