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Wolfe Research initiated coverage on Nordson (NASDAQ:NDSN) with a Peerperform rating on Wednesday. According to InvestingPro data, the company maintains impressive gross profit margins of 54.8% and has consistently paid dividends for 46 consecutive years.
The research firm highlighted that approximately half of Nordson’s EBITDA, which currently stands at $806.5 million, has been generated from past acquisitions, and expects mergers and acquisitions to continue playing a crucial role in the company’s value creation strategy and earnings compound annual growth rate.
Wolfe Research noted Nordson’s exposure to high-growth end markets, with semiconductor and medical sectors accounting for half of the company’s revenue. These markets are expected to deliver mid-single-digit or higher growth going forward, despite facing unfavorable cycles for more than two years.
The firm acknowledged that Nordson "has the DNA of an industrial compounder" and its current valuation is discounted compared to historical levels, factors that typically support a more positive outlook.
Wolfe Research explained its neutral stance, stating it remains on the sideline awaiting "more evidence that the M&A flywheel is spinning smoothly" and improvement in end market trends within the medical and semiconductor segments.
In other recent news, Nordson Corporation has reported notable developments that are of interest to investors. The company announced the continuation of its quarterly cash dividend, maintaining the payout at $0.78 per common share for the third quarter of fiscal year 2025. Analysts from DA Davidson have reaffirmed a Buy rating for Nordson, maintaining a price target of $285, citing increased earnings per share estimates for fiscal years 2025 and 2026, and a robust backlog in the Adhesive Dispensing Systems segment. Oppenheimer analyst Christopher Glynn upgraded Nordson’s stock rating from Perform to Outperform, setting a price target of $260, highlighting the company’s recovery from cyclical challenges and potential for positive organic growth. On the other hand, Jefferies adjusted their price target for Nordson to $230 from a previous $340, while maintaining a Hold rating, despite acknowledging strong second-quarter results and a solid backlog for the third quarter. Nordson’s second-quarter performance surpassed expectations, with DA Davidson noting increased margins and robust organic sales growth in the ATS segment, leading to a $0.12 operational earnings beat. The company issued third-quarter revenue and earnings per share guidance that exceeded DA Davidson’s projections, reflecting a positive outlook for the near term. However, despite these strong results, Nordson has opted to maintain its annual guidance, indicating a cautious approach for the full year.
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