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On Tuesday, KeyBanc Capital Markets adjusted its outlook on ITT Corp. (NYSE:ITT) by reducing the company's price target to $150 from $170, while maintaining an Overweight rating on the stock. This change reflects a cautious but optimistic view of the company's ability to handle current market challenges. According to InvestingPro data, ITT's stock has experienced significant pressure, down over 20% YTD, though analysis suggests the stock is currently trading near its Fair Value.
Jeffrey Hammond of KeyBanc expressed confidence in ITT's ability to navigate through several risks that investors have identified, including the automotive sector, short-cycle businesses, and international exposure. He highlighted ITT's Motion Technologies division, noting that margins are expected to remain around 20% for the year, which is particularly positive given the broader challenges in the automotive industry and tariff headwinds, especially in North America. The company's overall gross profit margin of 34.35% and strong financial health score from InvestingPro support this positive outlook.
Hammond pointed out that ITT's pricing dynamics with large automotive OEMs might be difficult to adjust in response to tariffs, but the company's North American exposure is mitigated by Ex-Works terms. This means that the customer assumes ownership at the factory, placing the burden of tariff exposure on them rather than on ITT.
In other divisions such as Connect and Control Technologies (CCT) and Industrial Process (IP), ITT is believed to have sufficient pricing power to counteract the impact of tariffs. Despite expecting the issues related to Boeing (NYSE:BA) to continue, potentially leading to a recovery in the second half of the year, Hammond anticipates that ITT's first-quarter update for 2025 will be more reassuring than what investors might fear.
In other recent news, ITT Inc. reported fourth-quarter earnings that surpassed analyst expectations, with adjusted earnings per share at $1.50, slightly above the consensus of $1.48. However, revenue for the quarter was $929 million, just under the anticipated $930.71 million. The company announced a 10% increase in its quarterly dividend, marking the third consecutive year of such increases. ITT's operating income saw a significant rise of 35% year-over-year, reaching $160 million, and the operating margin expanded by 290 basis points to 17.2%. For the full year 2025, ITT forecasts adjusted earnings per share between $6.10 and $6.50, with expected revenue growth of 2% to 4%. In related developments, DA Davidson analyst Matt Summerville raised ITT's stock price target to $170, maintaining a Buy rating. Summerville expressed confidence in ITT's market position and financial health, despite slight adjustments to earnings estimates for 2025 and 2026. The analyst highlighted ITT's strong balance sheet, which supports strategic investments and potential mergers and acquisitions.
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