Baird has maintained its Neutral rating and $92.00 price target for Toro (NYSE: TTC), a company known for its lawn maintenance and irrigation equipment.
The firm's position follows a visit to Toro's headquarters, where several key insights were observed. The analyst highlighted Toro's readiness for shifts towards battery and autonomous technologies, as well as increased production capabilities that are expected to support the conversion of backlogs in golf, grounds, and underground segments during fiscal year 2025.
The report also noted that inventory levels in the landscape channel are approximately 80% back to normal, suggesting that a return to regular shipment cadences next year could be beneficial for the company.
Furthermore, the early progress on Toro's Advanced Productivity Mode (AMP (OTC:AMLTF)) is anticipated to contribute to growth and margin expansion in fiscal years 2025 and 2026.
Despite these positive observations, the analyst expressed caution regarding the potential for a backlog conversion issue or an "air pocket," which could pose a risk to Toro's performance. Nonetheless, the overall sentiment from the visit was slightly more optimistic, with the company appearing to have various growth levers and the current valuation sitting at the lower end of its historical range.
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