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Oppenheimer has maintained its Outperform rating for Crane NXT (NYSE: CXT) with a consistent price target of $70.00. The firm's analysis focused on the company's long-term growth potential and the recent acquisition of OpSec.
Crane NXT's management has showcased optimism, citing expansion in various segments such as vending, retail, and financial services. However, the gaming sector remains in anticipation of an upswing in orders.
The analyst noted that despite the expected decline of around 5% in Security and Authentication Technologies by 2025, excluding the OpSec contribution, there is a silver lining. This dip is anticipated due to a reduction in U.S. government currency orders before the new $10 note release in 2026. Nonetheless, international strength is evident, with a backlog increase of 65% year-over-year, which could help offset the domestic downturn.
Crane NXT is also expected to continue its strategic acquisitions, aiming to emulate the success of past transactions such as those with Cummins (NYSE:CMI) Allison and Crane Currency. These moves are part of their strategy to bolster the company's market position and enhance growth.
The firm has revised its EBITDA forecasts for Crane NXT. The adjusted estimates for 2024 and 2025 are now $395 million and $409 million, respectively. This change reflects a slight reduction in sales growth expectations for the third quarter and updated projections for the Currency and CPI divisions.
In other recent news, Crane NXT has reported a 5% increase in second-quarter sales to $371 million, largely due to the successful acquisition of OpSec and strong performance in its Crane Currency division. The company has raised its full-year core sales growth guidance for currency to between 3% and 5% and has adjusted its EPS forecast for 2024 to fall between $4.20 and $4.35. Crane NXT aims to reach a revenue target of $3 billion over the next five years and has indicated a strong M&A pipeline, with plans for one to two acquisitions annually.
Additionally, Crane NXT expects higher currency business revenue in Q4, with an upcoming equipment upgrade for the US market. The company has also reported a record-high backlog achieved by Crane Currency, with new international currency orders. Crane NXT's integration of OpSec is proceeding well, with positive customer feedback.
However, Crane NXT has observed a slowdown in the OEM channel, which it plans to offset with investments in the custom self-checkout market. Despite this, the company maintains its market leadership in gaming and vending verticals and sees positive retail trends due to labor scarcity and increased automation.
InvestingPro Insights
To complement Oppenheimer's analysis of Crane NXT (NYSE: CXT), recent data from InvestingPro provides additional context for investors. As of the last twelve months ending Q2 2024, Crane NXT reported a revenue of $1.39 billion, with a modest growth of 2.89%. The company's profitability remains solid, with a gross profit margin of 46.51% and an operating income margin of 18.86%.
InvestingPro Tips highlight that Crane NXT has been profitable over the last twelve months, aligning with Oppenheimer's positive outlook. Additionally, analysts predict the company will remain profitable this year, supporting the firm's long-term growth narrative. However, it's worth noting that 4 analysts have revised their earnings downwards for the upcoming period, which investors should consider alongside Oppenheimer's adjusted EBITDA forecasts.
The company's P/E ratio stands at 18.51, suggesting a reasonable valuation relative to its earnings. Crane NXT also offers a dividend yield of 1.18%, with a notable dividend growth of 14.29% in the last twelve months, which may appeal to income-focused investors.
For those interested in a deeper dive into Crane NXT's financials and future prospects, InvestingPro offers 11 additional tips, providing a more comprehensive analysis to inform investment decisions.
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