DA Davidson reiterates Buy rating on Modine Manufacturing stock at $135

Investing.com - DA Davidson has reiterated its Buy rating and $135.00 price target on Modine Manufacturing (NYSE:MOD) following investor meetings at the company’s manufacturing operations in Calgary. The company, currently valued at $4.8 billion, has demonstrated strong financial health with a solid current ratio of 1.78 and moderate debt levels, according to InvestingPro data.

The firm expressed increased bullishness on Modine’s growth prospects after hosting twelve investors at two of the company’s SSM manufacturing operations in Calgary, noting a "clear, multi-pronged, multi-year growth algorithm" across its entire DC business, including SSM. This optimism is supported by the company’s 7.3% revenue growth and impressive 25% gross profit margin over the last twelve months.

DA Davidson stated it remains "convincingly unconcerned" regarding the previously disclosed second-half fiscal year weight for this business segment, suggesting confidence in the company’s outlook despite potential timing considerations.

The research note highlighted that Modine remains "well aligned with major Hyper, Neocloud, and Colo customers and associated roadmaps," with engineering and technology efforts that support further wallet and market share gains.

The firm made slight adjustments to its quarterly EBITDA cadence expectations and noted recent M&A activity, while maintaining its $135 price target and Buy recommendation on the stock.

In other recent news, Modine Manufacturing has announced a new credit agreement, establishing a senior secured revolving credit facility of up to $400 million and a $200 million term loan facility, both maturing on July 10, 2030. The agreement updates financial covenants and allows for increased restructuring charge allowances, alongside conditions for the disposition of its automotive business. Additionally, Modine has acquired Climate by Design International (CDI) for $65 million, expanding its indoor air quality product portfolio into new markets such as pharmaceutical manufacturing and healthcare. DA Davidson has reiterated its Buy rating and $135.00 price target for Modine following this acquisition, noting potential earnings per share benefits. Oppenheimer has also raised its price target on Modine to $122.00, maintaining an Outperform rating, and highlighting the company’s growth trajectory in the data center segment. KeyBanc Capital Markets initiated coverage with an overweight rating and a $125.00 price target, emphasizing Modine’s strategic shift towards high-growth climate opportunities. These developments reflect Modine’s ongoing efforts to enhance its market position and financial performance.

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