DA Davidson downgrades Alamo Group stock to Neutral on valuation concerns

Investing.com - DA Davidson downgraded Alamo Group (NYSE:ALG) from Buy to Neutral on Tuesday, setting a price target of $225.00. According to InvestingPro data, the stock is currently trading near its 52-week high of $230.16, after delivering strong returns over the past three months.

The research firm cited valuation concerns following a strong run in the stock price as the primary reason for the downgrade. DA Davidson also expressed concerns about potential strain in the Class 8 Vocational truck markets, which could impact Alamo Group’s performance. Despite these concerns, InvestingPro analysis shows the company maintains a GOOD overall financial health score, with liquid assets exceeding short-term obligations.

The downgrade comes as DA Davidson continues to gather data on second-quarter performance across various industrial sectors. The firm noted contrasting outlooks across different markets, describing the current environment as "a great stock pickers’ market." For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.

While downgrading Alamo Group, DA Davidson expressed more positive sentiment toward government-focused companies like Oshkosh (NYSE:OSK) and REV Group (NYSE:REVG), as well as agriculture-focused businesses such as Deere (NYSE:DE) and Titan International (NYSE:TWI) heading into earnings season.

The firm also observed that the agricultural sector may be reaching a trough, noting "a truly historic bottom for tractor sales" which suggests potential improvement in that market segment going forward.

In other recent news, Alamo Group Inc . reported its first-quarter 2025 earnings, exceeding expectations with earnings per share of $2.65, while revenue slightly missed projections at $391 million compared to the forecast of $392.2 million. Alamo Group has also completed the acquisition of Ring-O-Matic, a manufacturer of industrial vacuum excavation equipment, using existing cash for the transaction. Additionally, DA Davidson raised the price target for Alamo Group shares from $195.00 to $225.00, maintaining a Buy rating due to the company’s strong performance and nearly-zero net debt status. The firm’s Industrial business continues to be robust, with growth in the Vegetation sector contributing to a healthy cash position. In another development, Alamo Group declared a quarterly dividend of $0.30 per share, payable to shareholders on July 29, 2025. These recent developments highlight the company’s financial health and strategic growth initiatives.

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