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Investing.com - Northland has upgraded Alta Equipment Group (NYSE:ALTG) from Market Perform to Outperform and established a price target of $20.00. The industrial equipment provider, currently trading at $8.01 with a market capitalization of $246 million, has shown strong momentum with a 10.27% return over the past week.
The upgrade follows Alta Equipment Group’s recent publication of pro forma free cash flow metrics along with supporting data that connects these metrics to GAAP financials. According to InvestingPro data, the company operates with significant leverage, maintaining a debt-to-equity ratio of 22.13x and facing potential interest payment challenges.
Northland structured a pro forma free cash flow forecast in its model that aligns with the company’s pro forma view of its financial performance.
The analysis of this newly published cash flow data suggests to Northland that Alta Equipment Group’s shares are "meaningfully undervalued" at current levels.
The $20.00 price target represents significant potential upside for the industrial and construction equipment provider’s stock.
In other recent news, Alta Equipment Group reported mixed financial results for the first quarter of 2025. The company’s revenue decreased by 4.2% year-over-year, totaling $423 million, while adjusted EBITDA fell by $500,000 compared to the previous year. Despite these declines, the company saw improvements in gross margins, particularly in the service segment, and managed to reduce its selling, general, and administrative expenses by $7.9 million. Alta Equipment has suspended its quarterly dividend and expanded its share repurchase program, signaling a shift in capital allocation strategy. In terms of analyst activity, DA Davidson lowered its price target for Alta Equipment from $9.00 to $8.00 but maintained a Buy rating, indicating continued confidence in the stock’s value. Stifel analysts noted stable demand in the Construction Equipment sector and promising bookings and margins in the Material Handling division. Alta Equipment’s strategic initiatives, including divesting non-core assets and focusing on operational efficiency, are aimed at enhancing shareholder value amidst economic uncertainties.
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