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On Tuesday, Benchmark analyst Josh Sullivan adjusted the price target for ESCO Technologies (NYSE:ESE) shares, raising it to $190.00 from $150.00 while maintaining a Buy rating on the stock. The company, with a market capitalization of $4.2 billion and a perfect Piotroski Score of 9 according to InvestingPro, has increased its fiscal year 2025 earnings per share (EPS) guidance by $0.25 at the midpoint, now projecting $5.55 to $5.75. This revision is attributed to stronger than expected organic performance across several key segments.
ESCO Technologies’ Aerospace & Defense (A&D) segment experienced less disruption from Boeing (NYSE:BA) strikes than initially anticipated, contributing to the company’s positive outlook. Additionally, the Naval division delivered robust results, further bolstering the A&D segment’s performance. The company’s Utility Solutions Group (USG) also saw significant gains, particularly from contributions by Doble, as power transmission customers increasingly seek to extend the life of power assets amid rising load demands. Despite an expected decrease in renewable demand, USG has successfully absorbed the impact.
The Test segment of ESCO Technologies is showing signs of recovery, benefiting from cost reductions and a rise in baseline demand. The analyst highlighted that the company’s organic operations are performing better than forecasted, leading to an uplift in the FY25 organic guidance. The recent closure of the SM&P acquisition has expanded ESCO’s Naval portfolio, while ongoing macro power trends continue to favor the company’s USG segment. Furthermore, the improvement in the Test segment has increased the likelihood of a potential divestiture.
Investors are observing ESCO Technologies’ strategic maneuvers and operational improvements, which are reflected in the increased price target and sustained Buy rating. The company is navigating its diverse markets effectively, with particular strengths in the A&D and USG segments, as well as a promising turnaround in its Test segment. The raised EPS guidance for FY25 and the positive developments across its business units provide a solid foundation for ESCO’s growth trajectory in the coming years.
In other recent news, ESCO Technologies reported a strong performance for the fourth quarter, surpassing analyst estimates. The company’s adjusted earnings per share for Q4 were $1.46, slightly above the projected $1.44, and a revenue increase of 9.5% year-over-year to $298.5 million was noted. For the full fiscal year 2024, ESCO’s sales experienced a 7.4% increase, reaching $1.03 billion, while adjusted EPS saw a 13% growth to $4.18.
The company also issued robust guidance for fiscal 2025, with expected revenue ranging from $1.09 billion to $1.11 billion, surpassing analyst projections of $1.06 billion. Adjusted EPS for 2025 is anticipated to be between $4.70 and $4.90, indicating a 12-17% growth over fiscal 2024.
The Aerospace & Defense segment of ESCO Technologies was particularly notable, with Q4 sales rising 16.2% year-over-year to $124 million. The company also projects an adjusted EPS of $0.68 to $0.75 for the first quarter of fiscal 2025, marking a 10-21% year-over-year increase. These developments are part of recent news for ESCO Technologies.
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