Joseph C Giordano, an analyst from TD Cowen, maintained the Hold rating on Ametek (AME – Research Report). The associated price target is $160.00.
Joseph C Giordano has given his Hold rating due to a combination of factors related to Ametek’s stock. Despite Ametek’s consistent excellent execution, Giordano notes a probable peak in backlog, a trend of orders decelerating, and a large deal expected to close in the first quarter. This causes Giordano to adopt a more neutral position, as he anticipates organic revenue to slightly decrease in fiscal year 2024, with the situation potentially deteriorating as the year advances. Furthermore, he doesn’t find the valuation particularly attractive at this point.
In the second part of his analysis, Giordano elaborates on the situation, indicating that the company is currently in a stage of backlog harvesting. He notes the clear acceleration of orders to the downside after peaking in the second quarter, with the last quarter showing a 10% organic order decline – the largest single-quarter decline in over a decade. While he acknowledges that this decline is from high levels and dollar terms remain high, he considers it a potentially worrying trend. Overall, Giordano sees the situation as more tactical than structural, maintaining confidence in the merger and acquisition narrative, but suggests that a neutral stance is appropriate given the current circumstances.
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Ametek (AME) Company Description:
AMETEK, Inc. is a global manufacturer of electronic instruments and electromechanical devices. The company specializes in manufacturing instruments used for monitoring, examining, calibration and display purposes in the power, aerospace and industrial instrumentation markets. It also produces engineered electrical connectors and electronics packaging for electronic applications in defense, aerospace, medical and industrial markets.
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