ESAB stock rating upgraded to Buy by Loop Capital on growth outlook

Investing.com - Loop Capital upgraded ESAB (NYSE:ESAB) from Hold to Buy on Friday, while raising its price target to $140.00 from $130.00. The $6.7 billion market cap company currently trades at a P/E ratio of 25.35x, and according to InvestingPro data, analysts have set price targets ranging from $118 to $142.

The firm cited the recent pullback in ESAB shares as "overblown" and presenting an opportunity for investors. Loop Capital believes market concerns about ESAB’s Americas growth rate fail to recognize the company’s "multi-year winning streak" and comparatively tougher comps versus industry peers. InvestingPro analysis shows the company maintains a GOOD financial health score, with liquid assets exceeding short-term obligations and moderate debt levels.

Loop Capital expects ESAB’s increased research and development spending and equipment refresh initiatives to continue driving sales growth and margin expansion following what it described as a "growth hiccup" in the second quarter of 2025, which faced headwinds in Mexico and automation.

The research firm also highlighted ESAB’s bolt-on acquisition strategy, which it expects to provide earnings per share accretion and additional margin expansion opportunities.

Loop Capital noted that ESAB is well-positioned to benefit from recovery in global industrial production after two soft years, but indicated the current valuation does not reflect potential early-cycle improvement or trough demand conditions.

In other recent news, ESAB Corp reported impressive financial results for the second quarter of 2025. The company exceeded earnings expectations with an earnings per share (EPS) of $1.36, compared to the forecasted $1.34. Additionally, ESAB’s revenue reached $716 million, surpassing the anticipated $672.49 million. Despite these strong results, the company’s stock experienced a decline in premarket trading. In a related development, Stifel upgraded ESAB’s stock from Hold to Buy, maintaining a price target of $141. This upgrade followed a 17.2% drop in ESAB shares, even as the company slightly raised its guidance. These developments highlight recent shifts and assessments in ESAB’s financial and market performance.

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