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On Wednesday, CFRA analyst Jeff Wong upgraded Atlas Copco AB (ATCOA:SS) (OTC: ATLKY) stock rating from Hold to Buy, despite reducing the price target to SEK167.00 from SEK200.00. The $67 billion market cap company currently trades at a P/E of 22.17x. Wong revised the 12-month target price based on a price-to-earnings (P/E) ratio of 27.5x for the year 2025, which is slightly below the company’s five-year average forward P/E of 28.5x. This adjustment reflects the current uncertainty and expected lower profitability due to softer volumes.
Wong also adjusted the earnings per share (EPS) forecasts for Atlas Copco, setting them at SEK6.06 for the year 2025, down from SEK6.68, and SEK6.57 for 2026, decreased from SEK7.13. According to InvestingPro, three analysts have recently revised their earnings estimates downward for the upcoming period. The revision of the EPS forecasts is aligned with the moderated expectations for the company’s performance in the upcoming years.
Despite these adjustments, Wong expressed a positive outlook for Atlas Copco, citing the recent significant decline in the company’s share price as an opportunity for investors. InvestingPro data confirms this price weakness, showing a -14.09% return over the past year. The company maintains impressive fundamentals with a 42.72% gross profit margin and has maintained dividend payments for 46 consecutive years. He believes that the company’s strong order book, the growth of its high-margin service business, its strategic acquisitions, and its history of generating strong returns on capital make it an attractive investment.
The analyst’s optimism is further supported by the expectation of a recovery in industrial demand, which should lead to robust revenue growth and an improvement in margins for Atlas Copco. Wong’s analysis suggests that, while there are short-term challenges, the long-term prospects for the company remain strong. InvestingPro shows the company maintains a "GOOD" financial health score, with 10+ additional ProTips available to subscribers, offering deeper insights into Atlas Copco’s investment potential.
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