Goldman Sachs analyst Joe Ritchie maintained a Hold rating on Graco (GGG – Research Report) today and set a price target of $86.00.
Joe Ritchie has given his Hold rating due to a combination of factors surrounding Graco Inc.’s financial performance and market outlook. While Graco’s reported segment EBIT was in line with consensus expectations, there was a balance between better Contractor/Industrial EBIT and weaker Process performance. The company’s organic growth guidance for 2024 also aligns with the expectations previously set by Goldman Sachs. However, despite areas of strength in e-Mobility, Aerospace, Solar, and Agricultural equipment, the Semiconductor segment is projected to remain weak in the first half of 2024.
Moreover, Joe Ritchie’s assessment considers the higher-than-anticipated guidance for corporate expenses and taxes, which has led to a slight reduction in the EPS forecasts for FY24 and FY25, with a new introduction for FY26. Although Graco is at or near record margins across all segments, Ritchie emphasizes the need for accelerating volumes to drive stronger EPS growth. His neutral stance is reinforced by the belief that there are better risk/reward opportunities to be found within their coverage universe. The projected 12-month price target suggests only a modest free cash flow yield, further justifying the Hold rating.
According to TipRanks, Ritchie is a 5-star analyst with an average return of 11.7% and a 63.35% success rate. Ritchie covers the Industrials sector, focusing on stocks such as Parker Hannifin, RBC Bearings, and Core & Main.
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Graco (GGG) Company Description:
Graco, Inc. is a manufacturing company, which designs, manufactures and markets systems and equipment used to move, measure, control, dispense and spray fluid and powder materials. It operates through the following segments: Industrial, Contractor and Process. The Industrial segment includes the Applied Fluid Technologies, Industrial Products and Process divisions. It markets equipment and pre-engineered packages for moving and applying paints, coatings, sealants, adhesives and other fluids. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil & natural gas, water, wastewater, petroleum, food, lubricants and other fluids. The Contractor segment equipment includes sprayers that apply texture to walls and ceilings, highly viscous coatings to roofs and markings on roads, parking lots, athletic fields and floors. Graco was founded by Russell Gray and Leil Gray in April 1926 and is headquartered in Minneapolis, MN.
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