Gold prices steady ahead of Fed decision; weekly weakness noted
On Monday, Raymond (NSE:RYMD) James maintained a positive outlook on Fortive Corporation (NYSE:FTV), increasing the price target from $85.00 to $90.00 while sustaining an Outperform rating. The adjustment follows Fortive’s strong fourth-quarter performance, which surpassed analysts’ expectations in several key metrics. With a current market capitalization of $27.65 billion, InvestingPro analysis suggests the stock is slightly undervalued compared to its Fair Value, aligning with Raymond James’ bullish stance.
Fortive’s fourth-quarter results showcased organic growth that beat Raymond James’ model by 40 basis points, achieving 1.8% versus the expected 1.4%. The company also reported an adjusted EBIT margin closely aligned with consensus and Raymond James’ projections, at 28.7%, and an adjusted EPS of $1.17, which exceeded both the consensus and Raymond James’ estimate of $1.12. InvestingPro data reveals impressive gross profit margins of nearly 60% and highlights the company’s strong financial health score, indicating robust operational efficiency. Subscribers can access 8 additional key ProTips and comprehensive financial metrics through the platform’s detailed analysis.
The analyst noted that the metrics related to Fortive’s upcoming spin-off are on track, supporting the firm’s decision to upgrade the stock. High single-digit software and recurring revenue growth, along with low to mid single-digit organic growth at RemainCo, and double-digit orders growth at SpinCo align with Raymond James’ investment thesis. According to InvestingPro analysis, the company operates with a moderate level of debt and demonstrates consistently low price volatility, characteristics that could benefit both entities post-spin-off. For detailed insights into Fortive’s spin-off implications and comprehensive financial analysis, investors can access the exclusive Pro Research Report, available for over 1,400 US stocks.
However, the current geopolitical climate and tariff volatility are impacting visibility for Fortive’s China business (SpinCo), leading to a guidance that falls 3.4% below market expectations, at $6.29 billion compared to the anticipated $6.51 billion. Despite these challenges, the Industrial Scientific and Advanced Healthcare Solutions segments (RemainCo) continue to perform well. Additionally, the company accelerated its share repurchases in the fourth quarter of 2024, buying back 10 million shares, which accounted for 82% of its free cash flow.
The analyst expressed reinforced confidence in Fortive’s stock and its future direction, citing the upcoming spin-off as a catalyst for value creation. The separation is expected to simplify the complex business structure and result in two distinct entities with strong fundamentals and the autonomy to pursue their individual strategies. Trading at a P/E ratio of 33.9x and maintaining solid financial metrics, the company’s outlook appears promising despite recent earnings forecast revisions by some analysts.
In other recent news, Fortive Corporation reported fourth-quarter revenue of $1.62 billion, a 2.3% increase year-over-year, but fell short of the consensus estimate of $1.63 billion. The company’s adjusted earnings per share exceeded expectations, coming in at $1.17 against the projected $1.12. Despite these figures, Fortive provided a weaker-than-expected outlook for 2025, predicting revenue between $6.23 billion and $6.35 billion, under Wall Street’s projection of $6.47 billion. The company also estimated an adjusted EPS of $4.00-$4.12, compared to the consensus estimate of $4.12. In addition, Fortive’s Q1 2025 revenue guidance of $1.48-$1.51 billion and adjusted EPS of $0.83-$0.86 both fell below analysts’ estimates. On a positive note, the company reported strong order growth across all segments in Q4, including double-digit growth in its Precision Technologies unit. Fortive also plans to complete the separation of its Precision Technologies business in early Q3 2025. These are some of the recent developments concerning Fortive Corporation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.