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On Thursday, KeyBanc Capital Markets revised its outlook on Hillenbrand, Inc. (NYSE:HI), changing the stock’s rating from Overweight to Sector Weight. The decision comes as the research firm raised concerns over the current tariff regime’s impact on the company’s Applied Process Solutions (APS) segment and potential sales declines forecasted for fiscal year 2026. The stock, currently trading at $19.58, has declined over 55% in the past year and sits near its 52-week low of $18.36. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics.
Jeff Hammond, an analyst at KeyBanc, noted that despite Hillenbrand’s efforts to enhance its portfolio in recent years, the uncertainty in demand and expected sales downturn present significant challenges. These factors, combined with Hillenbrand’s weak pricing power in its Molding Technology Solutions (MTS) segment, contribute to the firm’s cautious stance. InvestingPro data reveals that five analysts have recently revised their earnings estimates downward, though the company maintains a healthy dividend yield of 4.6% and has sustained dividend payments for 18 consecutive years.
The analyst also highlighted the company’s high leverage as a vulnerability, especially in the prevailing economic climate. Given these risks, KeyBanc suggests that investors may benefit from shifting their focus to companies with stronger balance sheets and more stable growth prospects. Financial metrics from InvestingPro show a debt-to-capital ratio of 0.59, though the company maintains adequate liquidity with a current ratio of 1.51, indicating sufficient coverage of short-term obligations.
The downgrade reflects a strategic shift from KeyBanc, as it advises caution regarding Hillenbrand’s stock amidst a backdrop of economic uncertainty and market volatility. By moving to a Sector Weight rating, KeyBanc signals a neutral position on the stock, indicating that they expect Hillenbrand to perform in line with the average returns of the sector over the next 12 months.
Investors and market watchers will likely monitor Hillenbrand’s financial performance and management’s strategies to navigate the challenges outlined by KeyBanc. The company’s ability to adapt to the tariff impacts and improve its pricing power in the MTS segment could be crucial in determining its future stock performance.
In other recent news, Hillenbrand Inc . reported its second-quarter earnings for 2025, revealing a strong performance with earnings per share of $0.60, which exceeded the forecasted $0.55. The company’s revenue also outperformed expectations, reaching $716 million compared to the anticipated $691.52 million. Despite these positive financial results, Hillenbrand’s stock experienced a slight decline in premarket trading, reflecting broader market concerns. The company is navigating macroeconomic challenges, including tariffs and declining consumer confidence, which may impact future orders and revenue. Hillenbrand has updated its full-year revenue guidance to a range of $2.560 billion to $2.620 billion, with adjusted EPS projected between $2.10 and $2.45. Additionally, the company announced the completion of a 51% interest divestiture in its Milacron Injection Molding and Extrusion business, allowing it to focus on its core strengths. Analysts from firms like D.A. Davidson have noted the company’s strategic realignment efforts, including the potential sale of additional assets.
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