Gold is 2025’s best performer. UBS sees more upside
On Monday, Baird analysts upgraded ABM Industries (NYSE: NYSE:ABM) stock rating from Neutral to Outperform, setting a new price target of $56.00. This adjustment follows a sharp negative market reaction last Friday to the company’s fiscal second-quarter 2025 report. According to InvestingPro data, the stock’s RSI indicates oversold territory after taking a significant hit over the past week.
The analysts noted that the recent report did not raise concerns for them, as they managed to slightly increase their estimates. They observed an improvement in quarter-over-quarter organic growth rates. While margins were affected by timing, accounting, and mix, the analysts see this as a future positive. The company maintains strong financial health, with liquid assets exceeding short-term obligations, and has impressively maintained dividend payments for 55 consecutive years.
The report highlighted that new work and awards are strong, suggesting a promising year ahead for ABM Industries. The analysts believe these factors could lead to a record year for the company.
Despite weak free cash flow, the analysts explained this was due to a cautious approach to implementing an enterprise resource planning (ERP) system. They anticipate this could result in above-average accounts receivable collection potential moving forward.
In other recent news, ABM Industries reported its second-quarter financial results for 2025, showing a revenue increase to $2.1 billion, a rise of 4.6% compared to the previous year. The company’s adjusted earnings per share (EPS) was $0.86, slightly below the forecast of $0.87. Despite this minor miss, ABM Industries reaffirmed its full-year adjusted EPS guidance of $3.65 to $3.80, indicating confidence in its strategic initiatives. UBS analysts upgraded ABM Industries’ stock rating to Buy from Neutral, raising the price target to $54, citing an improved business outlook despite a recent 9% decline in the stock. UBS highlighted the growth in ABM’s Business & Industry segment, which saw a 2.6% increase, marking its first positive growth in over two years. The firm also noted that ABM’s largest segment’s positive shift significantly impacts the company’s overall outlook. ABM Industries is focusing on expanding its service offerings in the Manufacturing & Distribution segment, with strategic pricing adjustments and ongoing improvements in operational efficiency. The company is also exploring mergers and acquisitions to enhance its service offerings.
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