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On Thursday, RBC Capital Markets adjusted its price target for IDEX Corp (NYSE:IEX) shares, reducing it to $245.00 from the previous $256.00. Despite the lower target, the firm maintained an Outperform rating on the company’s stock. The adjustment follows IDEX’s fourth-quarter earnings, which fell short of expectations, and guidance for the first quarter of 2025 that was below consensus. The stock, currently trading at $197.58, has experienced a significant 11.84% decline over the past week, with InvestingPro data indicating the stock is in oversold territory.
IDEX’s fourth-quarter performance revealed an operating miss of 11 cents per share, which was 5% below the anticipated figure. The company’s forward-looking guidance also did not meet analysts’ predictions. However, RBC Capital sees several factors that suggest a positive outlook for IDEX. The firm highlighted the solid earnings quality in the last quarter, characterized by substantial incremental margins of 32% and an impressive free cash flow (FCF) conversion rate of 121%. Supporting this positive outlook, the company maintains strong financial health with a current ratio of 2.53 and has consistently raised its dividend for 15 consecutive years, demonstrating robust cash flow management.
The analyst at RBC Capital attributed the weaker-than-expected guidance for the first quarter of 2025 to specific one-time factors. These included increased stock compensation expenses, the completion of non-recurring projects, and a return to a normalized industrial backlog. Notably, the analyst found the resumption of blanket orders to be a particularly positive sign.
Looking ahead to the second half of 2025, there is an anticipation of a recovery in the life sciences and semiconductor sectors. IDEX is also well-positioned for further growth, with $1 billion available for mergers and acquisitions and a net leverage ratio of 1.5 times, indicating the potential for more bolt-on deals in the future. With a gross profit margin of 44.51% and analysts projecting EPS of $8.47 for FY2025, InvestingPro analysis reveals additional valuable insights about IDEX’s growth potential and market position in its comprehensive Pro Research Report, available along with 10+ additional ProTips for subscribers.
In other recent news, IDEX Corporation has been in the spotlight due to its recent financial performance and market expectations. The company reported a Q4 revenue miss, with sales reaching $863 million, up 9% from Q4 of 2023, but falling short of analyst predictions. Despite the revenue miss, the company’s adjusted earnings per share (EPS) for Q4 was $2.04, slightly surpassing analyst expectations of $2.03.
However, IDEX’s Q1 2025 guidance disappointed investors, projecting an adjusted EPS range of $1.60 to $1.65, well below the expected $2.03. For the full year 2025, IDEX expects an adjusted EPS of $8.10 to $8.45, which also falls below analyst expectations.
In response to IDEX’s recent performance, Citi analysts maintained a Buy rating on the company’s stock but reduced the price target from $267.00 to $264.00. Despite acknowledging the pressure on IDEX’s first-quarter outlook and the company’s guidance for the second half of the year, Citi analysts remain optimistic about IDEX’s long-term value creation prospects, citing growth in orders and an uptick in demand within the Health & Science Technologies (HST) segment.
These are among the recent developments that have shaped IDEX’s current standing in the market.
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