Toro stock price target cut to $80 by DA Davidson

On Tuesday, DA Davidson made adjustments to its view on Toro (NYSE:TTC) shares, reducing the price target from the previous $86.00 to $80.00. The firm’s analyst, Michael Shlisky, has chosen to keep a Neutral rating on the stock. Shlisky’s commentary provided insight into the reasoning behind the price target adjustment. The stock, currently trading near its 52-week low of $72.18, maintains a P/E ratio of 19.5x. InvestingPro analysis shows the stock is currently undervalued based on its proprietary Fair Value model. He noted that Toro appears to be on track to achieve its objectives for the current year, which includes reaching the company’s margin-optimization targets known as Amp It Up. The company has demonstrated steady performance with a 3.87% revenue growth and maintains a healthy gross profit margin of 33.7%. While the organic growth goals are modest, the company is still wary of the US consumer market.

Despite concerns, Toro’s Professional businesses, particularly in the Golf and Underground segments, are showing strong demand and backlogs, which are expected to continue into the following year. Additionally, Shlisky highlighted that new technologies are beginning to contribute positively, albeit at an early stage.

The analyst pointed out that the combination of these factors does not necessarily translate into double-digit earnings per share (EPS) growth, but the current developments are viewed positively. Shlisky’s remarks suggest a cautious but stable outlook for Toro, as the company navigates through its growth strategy and market challenges.

Toro’s financial performance, particularly the earnings report for the first quarter of fiscal year 2025, seems to have played a role in DA Davidson’s reassessment of the company’s stock value. The firm’s analysis indicates that while Toro is making progress, the anticipated growth rate may not be as robust as some investors might hope for. Nonetheless, the company’s efforts in margin optimization and new technology adoption are recognized as positive steps forward.

In other recent news, Toro Company reported its first-quarter 2025 earnings, which showed a slight beat in earnings per share (EPS) expectations but a shortfall in revenue. The company’s EPS reached $0.65, surpassing the forecast of $0.63, while revenue totaled $995 million, slightly below the anticipated $1 billion. Despite the EPS beat, the revenue miss led to concerns among investors. Toro’s Professional Segment saw a 1.6% increase in net sales, while the Residential Segment experienced a decline. Analysts noted the company’s ongoing challenges in the Residential Segment, which contributed to the mixed financial results. Toro maintains its full-year guidance, anticipating net sales growth between 0% and 1% and adjusted diluted EPS between $4.25 and $4.40. The company aims for $100 million in annualized run rate savings by fiscal 2027, with $50 million in savings already implemented in the first quarter. Toro continues to focus on innovation and strategic positioning in key markets such as golf and underground construction.

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