Tuesday, Oppenheimer initiated coverage on shares of Bel Fuse (NASDAQ:BELFA) (NASDAQ:BELFB) with an Outperform rating and a price target of $105.00. The firm highlighted Bel's significant improvements in management, portfolio mix, operations, pricing models, and product management as key factors for the positive outlook.
Bel Fuse has been delivering record-high margins despite the challenges faced in the current market cycle of 2024, signaling a favorable turn in the cycle.
On November 14, 2024, Bel Fuse completed the acquisition of Enercon, an Israel-based company specializing in custom power and networking solutions with a focus on defense and commercial aerospace sectors. The acquisition, which adds $120 million in sales, is expected to be accretive to Bel's earnings per share (EPS) and margins.
Oppenheimer's price target is based on a multiple of 16 times the firm's estimated 2026 adjusted EPS of $6.60 for Bel Fuse. This target reflects the analyst's confidence in the company's strategic direction and the expected benefits from the recent acquisition of Enercon.
The firm also provided estimates for Bel's financial leverage, forecasting approximately 2 times net leverage by the end of 2024. This is an improvement from the third quarter of 2024, where net leverage was reported at negative 0.8 times. Moreover, the Enercon acquisition is projected to add more than $0.95 to Bel's adjusted EPS in 2025.
With these developments, Oppenheimer views Bel Fuse's current valuation as a stable and solid entry point for investors, anticipating a continued upward trajectory for the company in the coming years.
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