Bel Fuse stock rating initiated with Buy, $115 target by Craig-Hallum

Published 25/03/2025, 21:10
Bel Fuse stock rating initiated with Buy, $115 target by Craig-Hallum

Tuesday, Bel Fuse (NASDAQ:BELFA) shares received a new Buy rating from Craig-Hallum, accompanied by a price target of $115. The firm’s analyst, Greg Palm, highlights the company’s recent transformation, emphasizing improved profitability, cash flow, and return metrics. According to InvestingPro data, the company has maintained strong financial performance with $534.79M in revenue and a healthy gross margin of 37.84%. The completion of this transformation has led to significant shareholder value creation, with Bel Fuse now focusing on growth and scale. InvestingPro analysis indicates the company is currently fairly valued based on its proprietary Fair Value model.

The acquisition of Enercon, which adds approximately 20% more revenue and 40% more EBITDA to Bel Fuse’s portfolio, has been a key step in this strategic shift. This move is also expected to be accretive to the company’s overall margins. The company’s strong financial position is evidenced by its current ratio of 2.92 and overall financial health score of 2.62 ("GOOD") according to InvestingPro. Craig-Hallum sees this as the beginning of a positive trend for Bel Fuse, with the potential for further margin improvements and additional mergers and acquisitions on the horizon.

According to the analyst, these developments could attract more investor attention to Bel Fuse. The current valuation metrics show Bel Fuse trading at 13.47x EV/EBITDA, with the company maintaining dividend payments for 23 consecutive years - one of several positive indicators highlighted in InvestingPro Tips. Craig-Hallum’s initiation of coverage with a Buy rating is based on these conservative estimates.

The analyst’s commentary underscores the belief that Bel Fuse’s strategic initiatives and recent acquisition are poised to enhance the company’s financial performance. With the anticipation of further positive developments, the firm suggests that Bel Fuse’s stock could soon align more closely with the valuation levels of its industry peers.

Bel Fuse’s focus on growth and scale through strategic acquisitions and internal improvements has been recognized by Craig-Hallum as a potential catalyst for closing the valuation gap in the market. The firm’s price target of $115 reflects confidence in Bel Fuse’s direction and future prospects.

In other recent news, Bel Fuse Inc. has made significant adjustments to its executive compensation program. The changes were approved by the Compensation Committee of the Board and disclosed in an SEC filing. These adjustments include a 30% reduction in target award opportunities for executives, based on overall company performance, with final payouts determined by individual contributions. Notably, the incentive awards for fiscal year 2024 exclude President and CEO Daniel Bernstein, whose bonus was previously set by contract. The company also announced that executives whose incentives were tied to business unit performance and met the criteria received full bonus payouts. The total incentive awards, partially paid in cash and deferred equity, were granted to several named executive officers. For example, CFO Farouq Tuweiq and executive officer Peter Bittner III each received a payout of $328,125. Additionally, Bel Fuse has revised its Incentive Compensation Program for fiscal 2025 to include new performance measures such as target net revenue and non-GAAP Adjusted EBITDA Margin.

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