On Thursday, Truist Securities adjusted its price target for Fortive Corporation (NYSE:FTV), a diversified industrial technology firm, to $82.00 from the previous target of $89.00 while maintaining a Buy rating on the company's shares.
The revision follows Fortive's second-quarter financial results, which showcased adjusted earnings per share (EPS) of $0.93, aligning with the higher end of the company's guidance range of $0.90 to $0.93 and slightly exceeding the consensus estimate of $0.92.
Fortive's quarterly revenues amounted to $1.552 billion, marking a 2% year-over-year increase, which is consistent with the company's projected growth range of 2% to 3%. However, the core revenue growth remained flat, at the lower end of the forecasted flat to 2% growth.
The company's adjusted operating profit was reported at $417 million, falling within the guided range of $410 million to $420 million, aided in part by $8 million in lower-than-expected corporate expenses. The adjusted operating margin reached 26.9%, surpassing the anticipated figure of around 26.7%.
Breaking down the performance by segment, Industrial & Scientific Operations (IOS) sales grew by 3.7% to $677 million, with a core increase of 3.1%, albeit with a slight decrease in adjusted operating margin year-over-year. The Precision Technologies (PT) segment experienced a sales decline of 1.5% to $552 million, with core sales down 6.6%, including a mid-teen percentage decrease in Tek sales.
The adjusted operating margin for PT was relatively stable. Meanwhile, the Advanced Healthcare Solutions (AHS) segment saw sales increase by 3.4% to $324 million, with a robust core growth of 5.0% and a significant improvement in adjusted operating margin by 260 basis points year-over-year.
In light of these results, Truist Securities has updated its EPS estimates for Fortive for fiscal years 2024 and 2025 to $3.80 and $4.12, respectively. The new price target of $82 is based on a 17 times multiple of the firm's 2025 adjusted EBITDA estimate and a 22 times multiple of the 2025 adjusted EPS estimate, both discounted back to their present value.
Despite the lowered price target, Truist Securities reaffirms its positive outlook on Fortive with a continued Buy rating.
In other recent news, RBC Capital adjusted its outlook on Fortive, reducing the price target to $77 from $83, while retaining a Sector Perform rating. This revision followed Fortive's Q2 results and challenges within some of its operations, notably the Tektronix and EA segments, and its business in China. The company has slightly increased its 2024 guidance, largely due to an anticipated lower tax rate in the second half of the year.
Looking ahead, Fortive is optimistic about the latter half of the year, expecting an improvement in core growth, driven by favorable order rates and strength in its Advanced Healthcare Solutions and software offerings. The company forecasts a total growth of 3% to 4% for the year and an adjusted diluted EPS in the range of $3.80 to $3.86, indicating an 11% to 13% increase year-over-year.
These are recent developments in Fortive's business operations and strategies.
InvestingPro Insights
Fortive Corporation (NYSE:FTV), as per the latest InvestingPro data, boasts a substantial market capitalization of $24.66 billion, reflecting its significant presence in the industrial technology sector. The company operates with a notable gross profit margin of 59.67% for the last twelve months as of Q2 2024, underscoring its efficiency in managing production costs relative to sales. This is in line with the impressive gross profit margins highlighted by one of the InvestingPro Tips, indicating a competitive advantage in its operational execution.
However, investors should be aware that the stock has experienced a notable decline over the past week, with a one-week total price return of -8.68%. This could be indicative of market volatility or investor reactions to recent events or disclosures. Additionally, Fortive's current P/E ratio stands at 30.79, which, when compared to its near-term earnings growth, results in a PEG ratio of 2.46. This suggests that the stock might be trading at a premium relative to its earnings growth potential, a point that's also mentioned in the InvestingPro Tips.
For those looking to delve deeper into Fortive's financial health and future prospects, InvestingPro offers additional insights and metrics. With a total of 8 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial position and market performance. To access these valuable insights, visit: https://www.investing.com/pro/FTV. Don't forget to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of data and analysis to inform your investment decisions.
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