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Investing.com - Raymond (NSE:RYMD) James has lowered its price target on Fortive (NYSE:FTV) to $65.00 from $90.00 while maintaining an Outperform rating following the completion of Ralliant’s spin-off. The stock, currently trading at $52.13, has declined over 26% in the past week, with InvestingPro data showing it’s now trading near its 52-week low of $50.00.
The firm noted that Fortive has officially completed the 100% spin of Ralliant, which is now trading under the ticker RAL. Raymond James also highlighted that Fortive expects second-quarter organic growth to be flat to slightly down due to tariff-related pricing pressure and customer concerns regarding trade, healthcare, and government spending policy.
Despite the lowered growth outlook, Fortive management indicated that consolidated earnings per share will still be near the mid-point of the prior guidance range. Raymond James had already anticipated a low-single-digit organic decline for the second quarter.
The research firm expressed satisfaction with the completed spin-off, suggesting that resetting topline expectations "lowers the 2Q bar" heading into earnings season and clears the way for cleaner focus on the long-term benefits of the transaction.
Raymond James expects Fortive to experience multiple expansion driven by its simplified business structure, fresh management perspective, margin expansion opportunities, and stronger mix of recurring revenue, though it emphasized that investors need "restored confidence and tangible evidence of post-spin benefits" and execution against plans outlined at the company’s capital markets day.
In other recent news, Fortive Corporation has completed the spin-off of its Precision Technologies segment, resulting in the formation of Ralliant Corporation. Fortive shareholders received one share of Ralliant for every three shares of Fortive they held, with approximately 113 million shares of Ralliant distributed. Following the spin-off, Olumide Soroye has taken over as President and CEO of Fortive, succeeding James Lico, who will remain as a non-executive senior advisor until the end of the year. Fortive has reported increased pressure on tariff-related pricing and customer demand, leading to an expectation that second-quarter revenue will be flat to slightly down, while the spun-off segment is anticipated to decline mid-single digits. Despite these challenges, Fortive projects that its second-quarter consolidated adjusted earnings per share will be near the mid-point of its previous guidance. BNP Paribas (OTC:BNPQY) Exane raised its price target for Fortive to $75, maintaining a Neutral rating, while RBC Capital lowered its price target from $79 to $75, also maintaining a Sector Perform rating. Both firms highlighted Fortive’s focus on organic growth and disciplined capital allocation in the wake of the spin-off. As Fortive and Ralliant embark on their separate paths, both companies aim to leverage their heritage and new management strategies to achieve their long-term targets.
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