In a report released today, Matt Summerville from D.A. Davidson upgraded Barnes Group (B – Research Report) to a Buy, with a price target of $45.00.
Matt Summerville has given his Buy rating due to a combination of factors including the Barnes Group’s fundamental strength in its Aerospace segment, which now takes precedence in sales, operating profit, and EBITDA compared to the Industrial segment. This distinction is particularly significant given the segment’s year-to-date and last twelve months’ underperformance relative to peers. Furthermore, following recent divestitures, Summerville anticipates a reduction in net leverage to below 3.0 times by the end of the calendar year 2024. He also expects that any forthcoming rationalization within the Industrial segment will likely expedite this deleveraging process. The company’s financial position appears to be on the cusp of a turnaround, which supports the upgrade in the stock rating.
Additionally, the consolidation and divestiture strategy—most notably the sale of Associated Spring and Hanggi—have set the stage for immediate balance sheet improvement. Summerville sees this strategy as paving the way for a stronger financial structure with the potential for further debt reduction through additional portfolio adjustments. Despite acknowledging past execution issues and the necessity for ongoing improvement, particularly within the Industrial segment, his outlook remains positive. The Aerospace segment is currently experiencing some of the best fundamentals observed over his two decades of covering Barnes Group. This optimistic perspective on the Aerospace sector, combined with the company’s strategic moves to improve its financial health, underpins Summerville’s decision to rate the stock as a Buy with a raised price target of $45.
According to TipRanks, Summerville is a 4-star analyst with an average return of 7.4% and a 54.15% success rate. Summerville covers the Industrials sector, focusing on stocks such as Crane NXT, Barnes Group, and Columbus Mckinnon.
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Barnes Group (B) Company Description:
Barnes Group, Inc. engages in the provision of engineered products, industrial technologies, and solutions, serving a wide range of end markets and customers. It operates through the Industrial and Aerospace segments. The Industrial segment includes molding solutions; force and motion control; and automation and engineered components business units. The Aerospace segment consists of original equipment manufacturing (OEM) business, maintenance repair and overhaul (MRO) services, and the manufacture and delivery of aerospace aftermarket spare parts. The company was founded by Wallace Barnes in 1857 and is headquartered in Bristol, CT.
