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Investing.com - H.C. Wainwright has reiterated its Buy rating and $116.00 price target on Transcat Inc. (NASDAQ:TRNS) following an analyst day at the company’s Houston calibration lab last week. Currently trading at $86.03, the stock has significant upside potential, with 4 analysts recently revising their earnings estimates upward according to InvestingPro data.
The research firm highlighted the positive impact of increasing automation within Transcat’s service segment, noting that it has already helped move service segment margins to the mid-30.0% range from the low-30.0% range over the past few years. This improvement aligns with the company’s current gross profit margin of 32.14% and healthy revenue growth of 8.49% over the last twelve months.
During the facility tour, H.C. Wainwright observed that automation efficiency gains were evident as technicians were able to work on multiple assignments simultaneously, with approximately seven full-time programmers dedicated to expanding these capabilities. InvestingPro analysis reveals the company maintains strong operational efficiency with a current ratio of 2.92, indicating robust liquidity to support its automation initiatives.
The firm projects service segment gross margin to reach 35.8% in FY27, up from 33.4% in FY25, with potential to move to 40.0% over time, while also noting that equipment rental facilities should continue to see elevated demand levels, driving margin improvement across distribution.
H.C. Wainwright expects the combination of increasing revenue (both organic and inorganic), expanding gross margins across both segments, and cost discipline to result in stronger operating leverage going forward.
In other recent news, Transcat Inc. reported financial results for the first quarter of fiscal 2026, surpassing analysts’ expectations. The company achieved an adjusted earnings per share of $0.59, significantly higher than the forecasted $0.40. Additionally, Transcat’s revenue for the quarter reached $76.4 million, exceeding the anticipated $72.28 million. In a separate development, Oppenheimer reiterated its Perform rating on Transcat after meeting with the company’s leadership at its Houston calibration laboratory. During the meeting, Transcat’s management reaffirmed their long-term revenue target of $500 million annually. They emphasized growth through recurring service revenue, strategic acquisitions, and efficiency improvements via automation. These recent developments highlight the company’s financial performance and strategic direction.
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