On Tuesday, Itron, Inc. (NASDAQ:ITRI) stock was downgraded from Overweight to Neutral by a Piper Sandler analyst, with the price target remaining steady at $109.00.
The decision comes despite Itron's strong performance, leveraging the improving semiconductor component situation to exceed expectations in the past year.
The analyst noted that while there might be potential for Itron to outperform estimates in 2024 and 2025, the current stock valuation already reflects these prospects.
The stock is trading at 21 times and 24 times price-to-earnings (P/E) on Piper Sandler's and Street's 2025 estimates, respectively, compared to an 18 times average from 2016 to 2019.
Itron's management recently provided long-term guidance in March, which the analyst believes is factored into the current stock price.
To maintain a positive outlook on Itron, investors would need to either have a strong belief in the company's ability to achieve the high end of revenue and margin targets with lower operational expenses or expect long-term revenue growth driven by load growth to exceed the guidance.
The Piper Sandler analyst concluded that while additional beat-and-raise scenarios could occur, the potential is already accounted for in the stock's price.
The firm is looking for a more favorable risk/reward balance in the future or data points that could increase confidence in a more optimistic long-term trajectory for Itron before reconsidering the stock's rating.
InvestingPro Insights
As investors digest the recent downgrade of Itron, Inc. (NASDAQ:ITRI) by Piper Sandler, it's essential to consider real-time metrics and insights from InvestingPro that could provide a broader perspective on the company's financial health and stock performance. With a solid market capitalization of $5.03 billion and a P/E ratio that stands at 31.07, Itron shows a substantial presence in its sector, reflecting a notable valuation by the market.
InvestingPro Tips highlight that analysts have a positive outlook on Itron's earnings, with seven analysts revising their earnings upwards for the upcoming period. This optimism may be underpinned by Itron's strong return over the last year, with a 61.43% price total return, indicating robust investor confidence. Additionally, the company's liquid assets exceed its short-term obligations, providing financial flexibility and stability. For investors seeking more detailed analysis, InvestingPro offers more tips that could guide investment decisions, with a total of 11 additional tips available for Itron at https://www.investing.com/pro/ITRI.
Moreover, Itron's recent stock performance has been impressive, trading near its 52-week high with a price that is 99.7% of this peak value. The company's share price closed at $109.64, closely aligning with Piper Sandler's price target. For those looking to explore these metrics further and gain access to exclusive investment insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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