On Friday, Baird increased the price target for Knowles Corp (NYSE:KN) shares to $25.00, up from the previous target of $20.00, while maintaining an Outperform rating. This adjustment follows the company's announcement of the sale of its Consumer MEMS Microphone (CMM) business to Syntiant Corp for a total of $150 million. The deal includes $70 million in cash and $80 million in Syntiant preferred stock.
The transaction involving Knowles' CMM business is considered transformational by the analyst at Baird and serves as a foundational element for the firm's Outperform rating. The sale is also seen as a testament to Knowles' management's vision and their ability to execute strategies effectively within their end markets.
Knowles' strategic move to sell its CMM business is expected to reshape the company's focus and potentially bolster its financial standing. The cash infusion, along with the preferred stock component, could provide Knowles with additional resources to invest in other areas of its operations or to return value to shareholders.
The analyst expressed a positive outlook on Knowles' valuation, which contributed to the decision to raise the price target. The sale of the CMM business appears to align with the company's broader objectives and market positioning.
In summary, the recent sale of Knowles' CMM business to Syntiant Corp for $150 million has been met with approval from Baird, which has resulted in an increased price target for Knowles' stock. The deal is highlighted as an indicator of the company's strong execution capabilities and management's strategic vision.
In other recent news, Knowles Corporation has made significant strides with its recent financial performance and strategic decisions. The company reported an 18% increase in revenues year-over-year for the second quarter of 2024, reaching $205 million. This growth was driven by a substantial 55% revenue surge in the Precision Devices segment, with the Medtech & Specialty Audio segment and the Consumer MEMS Microphone business also experiencing growth of 4% and 9% respectively.
The company has updated its financial outlook following this decision, with third-quarter revenues from continuing operations expected to range from $139 to $143 million, and non-GAAP diluted earnings per share from continuing operations projected at $0.24 to $0.28.
In other developments, Knowles' MIL-PRF-55681 capacitors have met the stringent standards of the Defense Logistics Agency for defense and aerospace applications, earning a place on the U.S. Department of Defense's Qualified Products List. Lastly, Erania Brackett has resigned from the Knowles Corporation Board of Directors following a change in her principal employment. These are the recent developments for Knowles Corporation.
InvestingPro Insights
As Knowles Corp (NYSE:KN) navigates through its recent business sale to Syntiant Corp, real-time data and insights from InvestingPro provide an additional layer of understanding for investors. One noteworthy InvestingPro Tip highlights that management has been actively buying back shares, which can be a sign of confidence in the company's future prospects. Moreover, the valuation implies a strong free cash flow yield, suggesting that the company may offer good value for money at its current price.
Looking at the InvestingPro Data, Knowles' market capitalization stands at approximately $1.58 billion. Despite a challenging period reflected in a negative P/E ratio of -8.27, the company has demonstrated a revenue growth of 14.27% over the last twelve months as of Q2 2024. This growth is further underlined by an 18.32% quarterly revenue increase in Q2 2024, indicating a potentially positive trajectory for the company's financial performance.
The company's gross profit margin is a solid 38.15%, showcasing the efficiency of its operations. While the company does not pay a dividend, investors might be interested in the fact that analysts predict Knowles will be profitable this year, as per another InvestingPro Tip. With these insights in mind and 27 additional tips available on InvestingPro, investors can make more informed decisions regarding Knowles Corp's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.