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On Monday, JPMorgan reiterated its Overweight rating on Fortive Corporation (NYSE:FTV), along with maintaining a price target of $87.00. The firm’s analysts highlighted Fortive’s upcoming RAL spin-off, noting the company’s current valuation reflects a ’worst of all worlds’ narrative due to its recent performance. Currently trading at $73.03, InvestingPro analysis suggests the stock is undervalued, despite trading at a P/E ratio of 31.79. The firm’s analysts view Fortive positively, considering its potential as an earnings compounder with a history of mixed acquisition outcomes.
Fortive has experienced challenges with one of its cyclical assets, which has led to consistent earnings misses and downward revisions, with InvestingPro data showing 8 analysts revising their earnings downwards for the upcoming period. However, this asset is now in the process of being spun off. JPMorgan analysts believe that the remaining Fortive assets consist of a strong portfolio of niche industrial businesses. These businesses demonstrate impressive financial metrics, including an impressive gross profit margin of 59.98% and strong cash flow generation, with the company operating at a moderate debt level.
The analysts also pointed out that while Fortive may not have a specific stock story at the moment, its assets should be regarded as high quality and defensive, making them a safer bet in the current market. The company’s financial health and the strategic spin-off are seen as positive indicators for its future performance.
Fortive’s stock price and market performance will continue to be watched closely by investors as the company approaches the RAL spin-off. The reiteration of the Overweight rating and the $87.00 price target by JPMorgan reflects confidence in the company’s value and its ability to navigate through its current challenges.
In other recent news, Fortive Corporation reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $0.85, which met market expectations. However, the company experienced a slight revenue shortfall, posting $1.47 billion against the anticipated $1.49 billion. Fortive has also expanded its share repurchase program, adding approximately 15.63 million shares, with a special purpose buyback plan worth up to $550 million funded by proceeds from Ralliant Corporation’s pre-separation dividend. Concurrently, Fortive announced the appointment of Neill Reynolds as Chief Financial Officer for Ralliant, effective June 2025, as part of its strategic spin-off plans. The company has filed a Form 10 registration statement with the SEC for this spin-off, which is expected to be completed by the end of the second quarter of 2025. Fortive’s leadership emphasized their commitment to shareholder value and capital deployment, with approximately 75% of free cash flow allocated to share repurchases since the spin-off announcement. Despite challenges, Fortive’s Intelligent Operating Solutions and Advanced Healthcare Solutions segments showed revenue growth, and the company anticipates mitigating most tariff impacts by the fourth quarter of 2025.
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