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On Friday, Northland analysts revised their price target for Northern Technologies International Corp. (NASDAQ:NTIC) stock, reducing it to $13 from the previous $20, while still maintaining an Outperform rating. The adjustment follows Northern Technologies' recent earnings report, which showed the company missing analysts' expectations on both revenue and earnings. According to InvestingPro data, the stock appears undervalued at current levels, with shares trading near their 52-week low of $7.67 and showing a significant 42.55% decline year-to-date.
According to Northland's assessment, the underperformance was partly due to weaker results in the Natur-Tec and ZERUST Oil & Gas segments, which did not align with their projections. Additionally, the company's gross margin was impacted by pricing pressures within the Natur-Tec business.
The analysts expect a recovery for Northern Technologies in the subsequent two quarters, despite the immediate setbacks. They attribute the price target reduction to a combination of increased macroeconomic uncertainty and a deceleration in growth, which are affecting the company's financial outlook. InvestingPro subscribers have access to over 10 additional exclusive ProTips and comprehensive financial metrics that could help evaluate the company's recovery potential. The platform's latest Pro Research Report provides detailed analysis of NTIC's financial health, which currently shows a "GOOD" overall rating.
Northern Technologies operates primarily within the regions where it produces and sells its products. The company specializes in corrosion prevention and control solutions across various industries, including oil and gas, through its ZERUST product line, and in the bioplastics space with its Natur-Tec brand. The company's financial position remains solid, with a current ratio of 2.22 indicating strong liquidity, while maintaining steady revenue growth of 7.59% over the last twelve months.
In their commentary, the analysts from Northland mentioned, "NTIC missed on the top and bottom lines. Natur-Tec and ZERUST Oil & Gas were below our model. GM also missed estimates due to pricing pressure in the Natur-Tec business. Both are expected to recover in the next two quarters. While NTIC primarily produces and sells in regions where it operates, we cut our numbers due to increased macro uncertainty and a slowdown in growth. Trimming PT to $13."
In other recent news, Northern Technologies International Corporation (NTIC) reported its fiscal Q2 2025 earnings, which fell short of analyst expectations. The company posted an earnings per share (EPS) of -$0.03, missing the anticipated $0.16, and revenue reached $19.07 million against a forecast of $22.3 million. This underperformance was accompanied by an 8.5% year-over-year decrease in total consolidated net sales, amounting to $19.1 million. NTIC also experienced a significant decline in net income, which dropped to $434,000 from $1.7 million in the previous year. The company noted challenges in the European market, particularly due to high energy costs, and highlighted a decrease in their gross profit margin to 35.6% from 40% last year. Despite these setbacks, NTIC maintained strong sales in the Chinese market, with an 8.1% increase to $3.7 million. In response to the financial results, NTIC has reduced its quarterly dividend to manage its cash position effectively. Looking ahead, the company remains optimistic about a rebound in the second half of the fiscal year, particularly in its Natur Tec and oil and gas segments.
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