On Tuesday, KeyBanc has adjusted its outlook for Hillenbrand (NYSE:HI), a diversified industrial company, by reducing its price target to $45 from the previous $50, while maintaining an Overweight rating on the stock. The revision follows Hillenbrand's third fiscal quarter 2024 earnings call, which led to a reassessment of the company's future earnings projections.
KeyBanc's analysis suggests that fiscal year 2025 could present more cyclical challenges in the company's Advanced Process Solutions (APS) segment than previously anticipated. These challenges are expected to somewhat obscure the benefits of recent enhancements to Hillenbrand's portfolio. Despite this, the firm remains confident in the long-term investment thesis it has established for Hillenbrand.
The decision to lower the price target comes in the wake of Hillenbrand's shares experiencing a significant drop in August, recording a 19% decline compared to the Industrial Select Sector SPDR Fund's (XLI) 1% decrease.
According to KeyBanc, the current share price reflects one of the lowest levels for Hillenbrand in several years, with the valuation aligning with historical averages, specifically around 9 times the next twelve months' enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), within the historical range of approximately 7 to 10 times.
Despite the reduced price target, KeyBanc reiterated its Overweight rating, indicating a belief in the stock's potential to outperform. The firm's stance is influenced by the significant transformation Hillenbrand has undergone over the past two years, which they believe is not fully reflected in the current stock valuation. The new price target of $45 represents KeyBanc's adjusted expectation for Hillenbrand's stock performance.
In other recent news, Hillenbrand Inc . has seen a flurry of activity from analysts and significant developments in its earnings and revenue results. The company reported a 14% increase in total revenue in its second quarter of fiscal year 2024, largely due to the acquisition of Schenck Process Food and Performance Materials business. However, Hillenbrand has updated its full-year revenue forecast to $3.2 billion to $3.3 billion, with adjusted EBITDA between $512 million and $536 million, and adjusted EPS of $3.30 to $3.50.
DA Davidson downgraded Hillenbrand's stock from Buy to Neutral, citing continued weakness in the company's Advanced Process Solutions (APS) segment and sluggishness in the Molding Technology Solutions (MTS) division. The firm also revised the price target for Hillenbrand's shares to $33.00, a decrease from the previous target of $54.00. This adjustment comes after a decrease in expected earnings for fiscal years 2024 and 2025 was noted.
InvestingPro Insights
As Hillenbrand navigates through its fiscal challenges, real-time data from InvestingPro provides a deeper look into the company's current financial status. With a market capitalization of $2.4 billion, the company presents a complex picture. The P/E ratio stands at a negative 11.5, reflecting investor concerns over profitability. However, the adjusted P/E ratio for the last twelve months as of Q3 2024 is 64.28, which indicates expectations of future earnings growth. This aligns with one of the InvestingPro Tips that suggests net income is expected to grow this year. Additionally, the dividend yield as of 2024 is 2.65%, with Hillenbrand having maintained dividend payments for 17 consecutive years, showcasing a commitment to returning value to shareholders.
The recent price activity also offers insights. The stock has taken a significant hit over the last week with a price total return of -14.13%, and the downward trend extends over the last month and three months, with returns of -21.27% and -22.94% respectively. Yet, analysts have predicted profitability for the year, and the stock is now trading near its 52-week low, which some investors might consider an attractive entry point.
For those looking to delve deeper into Hillenbrand's prospects, InvestingPro offers additional insights and tips. There are currently more tips available that provide a comprehensive analysis of Hillenbrand's financial health and future outlook. Visit https://www.investing.com/pro/HI for a full suite of expert analytics and to explore more InvestingPro Tips that could inform your investment decisions.
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