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On Thursday, DA Davidson analyst Matt Summerville revised the price target for Alta Equipment Group (NYSE:ALTG) shares, decreasing it to $9.00 from the previous $11.00, while sustaining a Buy rating on the stock. The adjustment follows the company’s fourth-quarter results for the fiscal year 2024 and further analysis by the analyst. The stock currently trades at $4.94, down nearly 53% over the past year, with analyst targets ranging from $8.50 to $20.00. According to InvestingPro analysis, the company’s overall financial health score is classified as WEAK, with 10+ additional ProTips available to subscribers.
Summerville noted that after reviewing Alta Equipment Group’s recent financial outcomes and conducting additional diligence, there was a need to modify the adjusted EBITDA forecast for the year 2025. Additionally, he introduced preliminary estimates for the company’s revenue and adjusted EBITDA for 2026. Despite some uncertainty, the analyst anticipates that Alta Equipment Group will experience year-over-year EBITDA growth in 2025, supported by a normalization in channel inventories, robust demand for parts and services, and ongoing efforts to improve productivity and profitability. Current EBITDA stands at $47.2 million, with revenue of $1.88 billion and a gross profit margin of 26.3%. Dive deeper into Alta Equipment Group’s financial metrics with a comprehensive InvestingPro Research Report, available along with 1,400+ other detailed company analyses.
The analyst also mentioned that the company’s balance sheet leverage seems manageable, bolstered by a substantial fleet and inventory that can be monetized. However, Summerville emphasized that reducing debt should remain a key focus for Alta Equipment Group, which currently carries $1.21 billion in total debt with a concerning debt-to-equity ratio of 15.57. The company maintains a current ratio of 1.34, suggesting adequate short-term liquidity. He believes that the company’s strategic initiatives are well-placed to enable it to achieve its financial targets in the coming years.
In his commentary, Summerville remarked, "While visibility remains a bit unclear, a normalization in channel inventories in 2025, paired with healthy parts/service demand and ongoing productivity/profitability initiatives, should enable ALTG to deliver Y/Y EBITDA growth in this year." He also pointed out the importance of the company’s balance sheet management, stating, "B/S net lev’g appears manageable, underpinned by a large, monetizable fleet/inventory, though reducing indebtedness should remain a top priority (in our view)." This aligns with InvestingPro analysis, which identifies significant debt burden as a key concern, with detailed metrics and future projections available to subscribers.
The new price target of $9.00 reflects the adjustments made by DA Davidson in response to the company’s recent financial performance and market conditions. Despite the lowered price target, the firm maintains a positive outlook on Alta Equipment Group’s stock, as indicated by the maintained Buy rating.
In other recent news, Alta Equipment Group reported its fourth-quarter 2024 financial results, showing a mixed performance. The company experienced a 4.5% year-over-year decline in quarterly revenue, totaling $498.1 million, although it exceeded DA Davidson’s expectations by $23 million. Alta’s full-year revenue for 2024 remained flat at $1.88 billion compared to the previous year. Despite the revenue drop, Alta managed to implement cost optimization measures that saved approximately $8 million annually. The company’s adjusted EBITDA for 2024 was $168.3 million, down from $201 million in 2023. Alta Equipment Group provided its EBITDA guidance for 2025, projecting a range of $175 million to $190 million, which suggests modest growth. DA Davidson maintained a Buy rating for Alta Equipment Group with a price target of $11.00, indicating confidence in the company’s performance despite challenges in the construction equipment market. Alta also highlighted its strategic focus on warehouse automation and fleet electrification as part of its long-term growth initiatives.
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