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On Thursday, Baird maintained its Neutral rating on ABM Industries (NYSE:ABM), with a consistent price target of $56.00. The firm acknowledged the company's performance as "Neutral-rated, incrementally positive," following an earnings report that surpassed expectations.
The initial guidance for fiscal year 2025 was noted to be in line with expectations, with a tendency towards the higher end of the forecast range.
Despite ongoing macroeconomic challenges, such as lower occupancy levels impacting the core Business & Industries (B&I) segment, ABM Industries has been executing effectively. The Technical Solutions segment, in particular, has seen a robust contribution from microgrid installation work, and the company has secured strong new contracts.
Concerns regarding Manufacturing & Distribution (M&D) headwinds were anticipated to have a significant negative impact, but these have proven to be less severe than expected. In light of these developments, Baird suggests that the recent sell-off in ABM's stock may have been excessive, and posits that the company is well-positioned to exceed expectations and potentially raise forecasts as the year progresses.
The analyst from Baird also projected that ABM's free cash flow (FCF) might provide the financial flexibility to support share buybacks. Additionally, the firm has initiated a new Fresh Pick-Bullish trading call on ABM Industries, indicating a positive short-term outlook for the stock.
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