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Investing.com - Loop Capital maintained its Hold rating and $120.00 price target on ESAB (NYSE:ESAB), currently valued at $7.35 billion, following the company’s announcement of a definitive agreement to acquire EWM GmbH, a heavy industrial welding equipment manufacturer. According to InvestingPro data, ESAB maintains a strong financial health score and has demonstrated consistent profitability over the last twelve months.
The acquisition significantly expands ESAB’s presence in the German heavy fabrication market as substantial defense spending investments are poised to begin. EWM has a strong reputation among customers and aligns with ESAB’s strategy to increase higher-margin equipment sales globally. With a current gross profit margin of 38%, ESAB shows promising potential for margin expansion through this strategic move.
The deal is expected to increase ESAB’s equipment sales to approximately 38% of total sales, up from 36% during the first quarter of 2025 and 30% in 2022. Loop Capital anticipates the acquisition will be "very modestly accretive" to earnings per share in its first year.
Loop Capital expects robust earnings growth from organic expansion, projecting high single-digit growth supported by both cost and cross-selling synergies. The transaction is scheduled to close during the second half of 2025.
The research firm noted it is "warming to shares" of ESAB, citing improving European industrial optimism, minimal direct tariff exposure, and the company’s ongoing mix shift toward equipment and gas control that should drive steady margin expansion.
In other recent news, ESAB Corporation reported strong financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved earnings per share of $1.25, exceeding the forecast of $1.20, and generated revenue of $678.14 million, outperforming the anticipated $632.75 million. ESAB also reported a record first-quarter adjusted EBITDA margin of 19.8%. In another development, ESAB announced its acquisition of German welding equipment manufacturer EWM GmbH for approximately €275 million, with the deal expected to close in the second half of 2025. The acquisition is projected to be accretive to ESAB’s adjusted earnings per share in the first year. Additionally, Stifel reiterated its Buy rating on ESAB with a price target of $126, citing increased confidence in the company’s demand outlook and internal improvement opportunities. ESAB also announced the approval of its Amended and Restated 2022 Omnibus Incentive Plan, which introduces changes to executive compensation and extends the plan’s termination date. These recent developments highlight ESAB’s strategic growth initiatives and strong market performance.
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