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Monday, shares of Modine Manufacturing (NYSE:MOD) maintained a positive outlook from DA Davidson analysts, with a reiterated Buy rating and a steady price target of $155.00. The stock, currently trading at $85.42, has shown significant momentum with a 10.5% gain over the past week. The endorsement comes after in-person meetings with Modine’s senior leaders, including President and CEO Neil Brinker and VP Kathy Powers, which left the analysts optimistic about the company’s prospects. According to InvestingPro, the company maintains strong analyst support with a consensus recommendation of 1.57 (Strong Buy).
The discussions with Modine’s management focused on the company’s performance and strategic directions. Analysts highlighted Modine’s potential to achieve significant market growth within its Data Center business, propelled by technological advancements and new customer acquisitions. The company’s current EBITDA stands at $358.4 million, with a healthy gross profit margin of 24.1%. Furthermore, the company is expected to transform its more cyclical Powertrain (PT) portfolio and generate strong double-digit growth in EBITDA and earnings per share (EPS).
Modine’s senior leaders shared insights on their strategies to outperform the material market in the coming years. The company’s efforts to gain market share through technology-led initiatives and to continue attracting new clients were emphasized as key drivers for its Data Center business segment.
In addition to the growth strategies for the Data Center sector, Modine’s management is working on accelerating the transformation of its PT portfolio. The company aims to reduce the cyclicality of this segment and enhance its stability and profitability.
The analysts’ confidence in Modine is further bolstered by the company’s current valuation, which they consider modest. Based on InvestingPro analysis, the stock appears overvalued at current levels, though it operates with moderate debt and maintains strong liquidity with a current ratio of 1.87. The belief is that Modine’s stock price does not fully reflect the company’s growth potential, making it an attractive investment opportunity. Discover 13 additional exclusive ProTips and comprehensive financial analysis available on InvestingPro.
In summary, DA Davidson’s analysts left their recent meetings with Modine’s leadership with a reinforced bullish stance on the company’s stock. They anticipate that Modine will continue to outgrow the market in its Data Center business, successfully revamp its PT portfolio, and achieve significant growth in both EBITDA and EPS. With projected earnings of $4.02 per share for fiscal 2025, the $155.00 price target suggests a strong conviction in Modine’s future financial performance.
In other recent news, Modine Manufacturing has announced a definitive agreement to acquire AbsolutAire, a Michigan-based manufacturer of direct-fired heating, ventilation, and make-up air systems. This acquisition, expected to close in April 2025, aims to enhance Modine’s Heating and Indoor Air Quality businesses and expand its offerings in commercial and industrial markets. AbsolutAire reported revenues of approximately $25 million in 2024, which will contribute to Modine’s growth strategy. DA Davidson has maintained its Buy rating for Modine with a $155 price target, viewing the acquisition as a strategic addition to Modine’s portfolio.
Additionally, Modine has secured a significant $180 million order for data center cooling products through a new partnership with an AI infrastructure developer. This order is seen as a positive indicator of Modine’s future prospects in the data center market. Oppenheimer has also reiterated its Outperform rating with a $145 price target, highlighting Modine’s strong outlook for data center growth and a robust mergers and acquisitions pipeline. The company’s recent share buyback program further reflects management’s confidence in its valuation and strategic initiatives. These developments underscore Modine’s ongoing efforts to strengthen its market position and expand its product offerings.
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