DA Davidson analyst Matt J. Summerville reiterated a Buy rating on the shares of Modine Manufacturing Company (NYSE:MOD), raising the price target to $43 from $38.
Summerville remains particularly bullish on the company's margin accretive organic growth within a handful of high-growth verticals/product lines.
MOD's data center business remains well positioned to capitalize upon healthy demand within the hyper-scale and colocation markets in North America and Europe/U.K.
The analyst underlines Modine Manufacturing's strong outperformance on a YTD basis (+60% vs. S&P500 at +14%).
The analyst notes the company's balance sheet is sound, with net leverage at just under 1.5x.
Also Read: Modine Manufacturing Bolsters Europe Operations To Meet Demand Growth
Summerville highlights the organic initiatives within EV BTMS (battery thermal management systems), European heat pump, North American IAQ (indoor air quality), and stationary power gen set product lines/end markets, potentially approaching 20% of FY24 sales.
The data center business has a targeted 5-year organic growth CAGR of 15%-25%, while the EV Components business has a targeted 5-year organic growth CAGR of 40%-50%.
For FY24/FY25, adjusted EBITDA and EPS estimates are unchanged at $258 million/$290 million and $2.45/$2.87, respectively.
Price Action: MOD shares are trading lower by 1.29% to $31.45 on the last check Friday.