Bullish indicating open at $55-$60, IPO prices at $37
On Friday, KeyBanc Capital Markets analyst Steve Barger upgraded Oshkosh Corporation (NYSE:OSK) stock from Sector Weight to Overweight, assigning a price target of $113.00. Barger's optimism is fueled by the potential impact of the new administration's focus on "America First" products and manufacturing, as well as anticipated infrastructure investments and a return to demand growth. According to InvestingPro data, Oshkosh currently trades at an attractive P/E ratio of 9.28x and maintains a "GOOD" overall financial health score, supporting the analyst's bullish stance.
Oshkosh, known for its specialty vehicles and vehicle bodies, has a backlog that Barger believes offers considerable potential for monetization. The company's backlog-to-forward sales ratio is higher than that of its peers, and its order retention has been more resilient when compared to Terex Corporation (NYSE:TEX). Barger also noted that despite concerns about the Next (LON:NXT) Generation Delivery Vehicle (NGDV) program's impact on Oshkosh's stock, the company has the capability to produce 100% internal combustion engine (ICE) vehicles for the United States Postal Service if required. With a 12.2% dividend growth rate and 12 consecutive years of dividend increases, Oshkosh demonstrates strong financial discipline and shareholder commitment.
The analyst's statement underscored that some investors might consider the upgrade premature. However, the sentiment at the recent World of Concrete trade show and the recent price action within the sector led Barger to favor an early upgrade in anticipation of improving market conditions.
KeyBanc's analysis suggests that Oshkosh's current share price and valuation offer an attractive entry point for investors. Shares are trading at approximately 9.0 times next twelve months (NTM) earnings per share (EPS) estimates and 9.1 times fiscal year two (FY2) EPS estimates. These multiples are below the company's five-year average NTM and FY2 price-to-earnings (P/E) multiples of 12.2x and 11.3x, respectively. The price target of $113.00 implies a multiple of 9.2 times FY26 EPS and 6.1 times FY26 earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates, which is considered favorable when compared to historical averages of 16.4 times EPS and 9.5 times EBITDA. InvestingPro analysis indicates that Oshkosh is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top US stocks.
In other recent news, Oshkosh Corporation has unveiled an array of new technologies focused on electrification, artificial intelligence, autonomy, and connectivity. The company introduced an all-electric front-loader vehicle and an autonomous robot for refuse collection, along with a Collision Avoidance Mitigation System for first responders. Oshkosh also debuted a driverless cargo handler for airports, emphasizing its commitment to integrating next-generation solutions across its portfolio.
In terms of financial performance, Oshkosh reported a 9% revenue increase to $2.74 billion in the third quarter of 2024, with an adjusted earnings per share (EPS) of $2.93. However, due to softer market conditions in North America, the company adjusted its full-year EPS outlook downward.
In personnel changes, Matthew Field was appointed as the new Chief Financial Officer, a move viewed positively by Baird analysts. Ranjit Nair was announced as the new President of Oshkosh AeroTech, emphasizing the company's focus on advancing aviation technologies.
However, there are concerns about potential changes to the U.S. Postal Service's contracts for electric vehicles. Analyst Kyle Menges from Citi suggests a possible reduction in earnings per share if the electric vehicle portion of the contract is entirely removed, but maintains a positive outlook on Oshkosh. These are the recent developments for Oshkosh Corporation.
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