Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Evercore ISI initiated coverage on Ralliant Corp. (NYSE:RAL) with an In Line rating and a $52.00 price target. With the stock currently trading at $48.02, this represents modest upside potential. InvestingPro data shows the stock’s RSI indicates overbought conditions, with analyst targets ranging from $48 to $64.
The research firm cited Ralliant’s positioning for mid-single-digit organic sales growth and potential for high single-digit EBITDA growth and double-digit EPS growth longer term. Evercore ISI noted the company’s guidance model encompasses 3-5% organic sales growth with faster EBITDA expansion. The company, currently valued at $5.43 billion, maintains a Fair financial health score according to InvestingPro metrics.
Near-term revenue headwinds remain a concern, particularly in the Test & Measurement segment, which experienced a 23% year-over-year decline in the March quarter. Evercore ISI expects these declines to moderate with growth potentially resuming in Q4 2025 or early 2026.
The firm believes Ralliant can achieve 30-40 basis points of annual margin expansion from its normalized EBITDA margin of 23.5%, driven by scale, efficiency, and mix benefits from Defense & Space and Utilities segments. The current margin reflects approximately $45 million in separation-related headwinds.
Evercore ISI also highlighted Ralliant’s shift away from its Danaher (NYSE:DHR) legacy toward organic reinvestment and shareholder returns rather than acquisitions, estimating potential EPS upside of approximately 10 cents by allocating about 60% of free cash flow to share buybacks. However, InvestingPro analysis indicates the company currently suffers from weak gross profit margins and poor free cash flow yield, which could impact the effectiveness of its capital return strategy. Subscribers can access additional insights and 12+ more ProTips about RAL’s financial outlook.
In other recent news, Ralliant Corp. has been the focus of multiple analyst firms following its spin-off from Fortive Corp (NYSE:FTV). TD Cowen initiated coverage with a Buy rating and a price target of $64, noting early signs of recovery in Ralliant’s Test & Measurement margins. Barclays (LON:BARC) also initiated coverage with an Overweight rating and a $60 price target, highlighting the potential for a significant earnings upturn by 2026. However, Seaport Global Securities offered a more cautious perspective, rating Ralliant as Neutral due to mixed prospects and near-term challenges, particularly in its Tek division. BofA Securities took a more conservative stance, initiating coverage with an Underperform rating and a $48 price target, while forecasting improvements in the Test & Measurement segment starting in 2025. The spin-off from Fortive has been completed, with Ralliant trading independently on the NYSE. Fortive warned of second-quarter revenue pressures due to tariff-related pricing and customer demand challenges, impacting both its core and spun-off operations. Despite these challenges, Fortive expects its second-quarter consolidated adjusted EPS to align with previous guidance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.