Nucor earnings beat by $0.08, revenue fell short of estimates
On Thursday, Stifel analysts maintained a Hold rating on Waters Corp (NYSE:WAT) stock with a steady price target of $360.00. According to InvestingPro data, Waters Corp, currently trading at $386.41 with a market cap of $22.9 billion, appears overvalued based on its Fair Value analysis. The commentary from the analysts followed Waters Corp’s investor day, which they found to be substantial though not particularly flashy. The event provided insights into the company’s growth drivers across various markets and initiatives, suggesting a high single-digit potential for top-line growth and consistent margin improvements.
The analysts highlighted the company’s detailed presentation on the factors driving growth within its end markets and commercial initiatives. They noted the potential for an approximate 4% growth in instrument sales, which has been cautiously held back. Despite the positive outlook on the company’s operational performance, the analysts expressed concerns over the stock’s valuation, suggesting that a significant upward adjustment in earnings estimates or a new valuation framework might be necessary to justify a 20% upside in the share price.
Waters Corp’s strategy indicates an expected annual margin expansion of 40 basis points. However, the analysts pointed out that Waters Corp’s stock has historically never traded near the 31x multiple on a forward earnings per share (EPS) estimate that would be required to achieve a 20% stock price increase, except during the peak of the Covid-19 pandemic in the second half of 2021.
The Stifel report concluded with a recognition of the company’s solid case for growth and profitability. Yet, it emphasized the need for either a reevaluation of how the stock is valued or for the market to significantly reassess future earnings potential to align with the current stock price target. InvestingPro analysis reveals that Waters Corp maintains strong financial health with a "GOOD" overall score, though it’s currently trading at a high P/E multiple of 35.67x. Discover 10 more exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
In other recent news, Waters Corporation reported its fourth-quarter 2024 earnings, exceeding analyst expectations with an earnings per share (EPS) of $4.10, compared to the forecast of $4.03. The company also achieved revenue of $873 million, surpassing the projected $856.84 million, marking a 6.4% year-over-year increase. Despite these strong financial results, the stock experienced a 5.27% decline in pre-market trading. Analyst firms have provided varied perspectives on Waters Corporation’s outlook. Leerink Partners raised its price target to $430, maintaining an Outperform rating, reflecting confidence in the company’s growth trajectory. Conversely, BofA Securities lowered its price target to $410, citing valuation concerns, and maintained a neutral rating. Bernstein analysts reiterated an Outperform rating with a $430 target, highlighting Waters’ strong performance in the fourth quarter and suggesting that the company’s conservative guidance could lead to positive revisions. Additionally, TD Cowen maintained a Hold rating with a $410 target, acknowledging Waters’ strategic initiatives and potential for margin expansion, while noting high sector valuation as a limiting factor. These developments provide investors with insights into Waters Corporation’s recent performance and future prospects.
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