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On Monday, RBC Capital Markets adjusted its price target on shares of Loar Holdings Inc (NYSE: LOAR), lowering it to $92.00 from the previous $100.00. Currently trading at $66.70, the stock maintains significant upside potential according to analyst targets ranging from $91 to $105. Despite the reduction, the firm retains an Outperform rating on the aerospace and defense company’s stock, which InvestingPro data shows is trading at notably high earnings and EBITDA multiples. This adjustment comes in the wake of Loar Holdings’ recent announcement of a significant acquisition and the release of preliminary fourth-quarter results for 2024, along with an updated financial outlook for 2025.
On February 20, Loar Holdings disclosed an agreement to acquire LMB Fans & Motors (LMB) for approximately €365 million. While financial specifics for LMB were not detailed, estimates suggest that LMB is on track to generate around $40 million in revenue and approximately $20 million in EBITDA, which would indicate a roughly 50% margin. The acquisition price is believed to represent a mid-teens multiple on LMB’s projected financials for 2026, and analysts anticipate that the business is well-positioned for significant EBITDA growth moving forward.
The preliminary results for the fourth quarter of 2024 exceeded RBC Capital’s expectations. These results, combined with the updated guidance for 2025, have informed the firm’s decision to maintain an Outperform rating on Loar Holdings. However, the new developments have led to a revised price target, now set at $92. The RBC Capital analyst stated, "LOAR announces ~$380M acquisition with positive, preliminary 4Q24 results and updated 2025 guide; we are maintaining our OP rating and updating our PT to $92 from $100."
Loar Holdings’ strategic move to acquire LMB Fans & Motors is seen as a positive step that could enhance the company’s financial performance in the coming years. The updated guidance and strong preliminary results are indicators that the company is on a growth trajectory. The decision by RBC Capital to maintain an Outperform rating reflects confidence in Loar Holdings’ potential despite the moderated price target.
In other recent news, Loar Holdings Inc. successfully completed an equity offering, raising approximately $310 million in net proceeds. The offering included around 5.8 million shares, with the funds primarily aimed at reducing existing debt, thereby lowering interest expenses. RBC Capital has maintained its Outperform rating for Loar Holdings, reflecting confidence in the company’s strategic positioning and future growth prospects within the aerospace sector. The firm noted that while some revenue projections for the first quarter of 2025 have been delayed due to the Boeing (NYSE:BA) strike, the overall outlook remains robust.
Additionally, Loar Holdings has commenced a roadshow for a public stock offering of 4.75 million shares, with a portion of the proceeds also directed towards debt repayment. Notably, Jefferies and Morgan Stanley (NYSE:MS) are leading the execution of this offering, with several other financial firms participating. In a separate development, Loar Holdings announced the appointment of Nicole Huque as Chief Talent Officer, emphasizing the company’s focus on leadership and a performance-driven culture. Huque’s extensive experience in the aerospace and defense industry is expected to contribute significantly to Loar’s growth strategy. These recent developments highlight Loar Holdings’ efforts to strengthen its financial position and leadership team amidst a challenging industry environment.
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