Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - TD Cowen has raised its price target on Acuity Brands (NYSE:AYI) to $390 from $330 while maintaining a Buy rating on the stock. According to InvestingPro data, the stock is currently trading above its Fair Value, with 4 analysts recently revising their earnings expectations upward for the upcoming period.
The firm cited impressive fourth-quarter fiscal 2025 margins that reflect cost reduction initiatives and an accelerated focus on productivity improvements across the lighting and building management solutions provider. The company maintains strong profitability with a gross margin of 47.4% and EBITDA of $699.4 million in the last twelve months.
TD Cowen noted that Acuity’s fiscal year 2026 guidance assumes flat market growth, which the firm believes may be conservative as order rates could benefit from interest rate cuts.
The research firm also highlighted that Acuity Brands Lighting (ABL) is gaining market share, with the integration of the Acuity Intelligent Spaces (AIS) business progressing well and expected to deliver margin expansion beyond fiscal year 2026.
The new $390 price target is based on 18 times TD Cowen’s fiscal year 2027 adjusted earnings per share estimate for Acuity Brands.
In other recent news, Acuity Brands reported its fourth-quarter fiscal 2025 earnings, surpassing expectations for earnings per share (EPS) but slightly missing revenue forecasts. The company achieved an adjusted diluted EPS of $5.20, exceeding the forecast of $4.77, representing a 9.01% surprise. However, revenue was reported at $1.2 billion, which was slightly below the anticipated $1.23 billion. Despite this revenue miss, investor sentiment remained positive. Additionally, William Blair reiterated its Outperform rating for Acuity Brands, citing the company’s sales guidance of $4.7 billion to $4.9 billion and EPS guidance of $19.00 to $20.50 as exceeding market expectations. The firm noted that the guidance contained "ample conservatism," suggesting room for positive performance. These developments indicate continued investor interest and confidence in Acuity Brands’ potential.
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