On Tuesday, KeyBanc Capital Markets maintained its positive stance on Wabtec Corporation (NYSE:WAB), reiterating an Overweight rating with a $220.00 price target. The firm's optimism towards the company is rooted in Wabtec's robust competitive position, diverse international exposure, and significant order backlog.
The analyst highlighted Wabtec's dominant global market share in locomotives, modifications, upgrades, and services. The company's commitment to continuous improvement and strategic management of lower-margin product lines also contributes to KeyBanc's favorable outlook.
Wabtec is expected to lead in technological advancements and the production of more efficient, lower-emission freight locomotives. Additionally, the company is anticipated to drive higher margins in its Transit segment. Assuming no major global economic downturn, organic growth is predicted to be in the mid-single to high-single digits, potentially enhanced by mergers and acquisitions (M&A) and share buybacks.
Wabtec's potential to achieve low-teen earnings per share in the coming years, compared to KeyBanc's 2027 estimate of $10.73, is seen as a distinguishing factor when compared to other machinery original equipment manufacturers (OEMs). This is particularly notable given Wabtec's year-to-date share price outperformance in 2024, which is approximately 60% versus the S&P 500's roughly 28%.
The analysis suggests that if the current market conditions continue, Wabtec may outperform again in 2025. This outlook could shift if there is a resurgence in non-residential activity and order rates for Oshkosh Corporation (NYSE:OSK) and Terex Corporation (NYSE:NYSE:TEX). According to InvestingPro data, TEX currently trades at an attractive P/E ratio of 7.65 and maintains a healthy return on equity of 27%. The company appears undervalued based on InvestingPro's Fair Value analysis, with strong fundamentals including a current ratio of 2.39 and consistent dividend payments for 12 consecutive years.
For deeper insights into comparative valuations and comprehensive analysis of these machinery stocks, investors can access detailed Pro Research Reports covering 1,400+ US equities on InvestingPro.
In other recent news, Terex Corporation has announced a series of significant developments. The company reported a net sales decrease of 6% year-over-year for the third quarter of 2024, amounting to $1.2 billion, and earnings per share (EPS) of $1.46.
Despite this decrease, the company completed the acquisition of ESG, a move projected to contribute an additional $40 million in EBITDA in the fourth quarter. Analysts anticipate that the operational synergies from this acquisition will reach at least $25 million by the end of 2026.
In addition, Terex reported a robust backlog of $1.6 billion, with the AWP segment accounting for $1.2 billion. The full-year EPS is projected between $5.85 and $6.25, with EBITDA of $635 million to $670 million.
In leadership changes, Terex appointed Jennifer Kong-Picarello as its new Senior Vice President and Chief Financial Officer, who brings over two decades of financial experience from Schneider Electric (EPA:SCHN), Honeywell (NASDAQ:HON), and Tyco.
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