On Tuesday, Roth/MKM initiated coverage on Thermon Group Holdings (NYSE: NYSE:THR), a company specializing in thermal solutions, with a Buy rating and a price target of $36.00. The firm's assessment comes after a recent decline in the company's stock price, which they believe offers an attractive entry point for investors.
The firm is optimistic about Thermon Group Holdings' involvement in the energy transition sector, particularly its contributions to decarbonization and electrification. They note the company's commitment to digital innovation, which is expected to continue generating value, including an increase in higher-margin, annuity-like sales.
Roth/MKM anticipates that Thermon's strategic focus could lead to an expansion in its market multiples. This expectation is based on the company's execution of its core strategies, which is seen as a strong point. Moreover, the potential for strategic mergers and acquisitions, which have historically been accretive, is viewed as an additional upside.
The analyst from Roth/MKM highlighted, "We initiate on THR with a Buy and $36 PT, as we believe a recent pullback presents an attractive entry point. We favor the company's exposure to energy transition overall, offering key solutions tied to decarbonization and electrification."
They further emphasized the value of digital innovation in driving the company's growth, stating, "A focus on digital innovation looks to drive continued value creation, in our view, including a growing base of higher margin annuity-like sales."
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