Analyst Andrew Obin of Bank of America Securities reiterated a Hold rating on Ametek (AME – Research Report), with a price target of $182.00.
Geoff Meacham has given his Hold rating due to a combination of factors related to Ametek’s recent performance and future outlook. The company experienced a modest decline in organic year-over-year orders, marking the third consecutive quarter of such declines. Despite this, the CEO has indicated an expectation for order growth to surpass sales in the second half of the year, suggesting an end to the negative impact of destocking by the end of the second quarter. The organic revenue growth of 1.5% year-over-year was also noted to be lower than the peer average. The decision to maintain a Neutral rating takes into account these mixed signals in the company’s performance and the anticipated recovery in order growth.
Additionally, Meacham’s assessment considered Ametek’s 2024 guidance, which is broadly aligned with consensus expectations for organic revenue growth and adjusted earnings per share (EPS). The guidance includes the impacts of the recent acquisition of Paragon Medical, which is expected to contribute to earnings but also impose a drag on margins. The forecasted margin contraction, along with the anticipation that price/cost benefits will not be as significant a tailwind in 2024 as in the previous year, further informs the Hold rating. Despite a conservative margin outlook, the 2024E adjusted EPS is maintained at $6.82, reflecting a balanced view of the company’s earnings trajectory compared to its peers.
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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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