On Wednesday, investment firm KeyBanc initiated coverage on Hillenbrand (NYSE:HI) stock, assigning an Overweight rating with a price target of $50.00. The firm recognizes Hillenbrand's significant transformation over the past two years and sees potential for the company's stock value to increase despite near-term cyclical concerns.
The analyst from KeyBanc noted Hillenbrand's compelling self-help story and the opportunity for improved margins within its two divisions: MTS and APS. The MTS division is expected to benefit from a cyclical recovery, an improved mix, and restructuring efforts, while the APS division is likely to see gains from acquisition integration and enhanced aftermarket pricing.
KeyBanc's positive outlook is also based on the expectation that Hillenbrand will deliver on its fiscal year 2024 framework. As the company demonstrates progress and the operating environment normalizes, investors are anticipated to gain confidence in the "new and improved" Hillenbrand.
The analyst's commentary emphasized the undervalued nature of Hillenbrand shares, suggesting that the market has not fully appreciated the extent of the company's recent changes. This underestimation presents an opportunity for the stock to re-rate higher as Hillenbrand continues to execute its strategy.
The Overweight rating indicates that KeyBanc believes Hillenbrand's stock is likely to outperform the average return of the stocks the analyst covers over the next 12 to 18 months. With a set price target of $50.00, KeyBanc signals its belief in Hillenbrand's growth potential and the anticipated positive developments in the company's operations.
In other recent news, Hillenbrand Inc . has seen a range of developments. DA Davidson maintained a Buy rating on Hillenbrand stock, with a price target of $54.00, despite acknowledging broader macroeconomic challenges to the end demand for Hillenbrand's products. The firm's confidence is bolstered by Hillenbrand's strategic transformation and cost-saving measures, as well as recent acquisitions.
Furthermore, Hillenbrand reported a 14% increase in total revenue in its second quarter fiscal year 2024 earnings, largely due to the acquisition of Schenck Process Food and Performance Materials business. However, the company has not seen the expected rebound in order rates, with mid-sized capital project orders lower than anticipated.
Hillenbrand has updated its full-year revenue forecast to $3.2 billion to $3.3 billion, with adjusted EBITDA between $512 million and $536 million, and adjusted EPS of $3.30 to $3.50.
DA Davidson also adjusted its outlook on Hillenbrand by reducing its price target to $54 from the previous $59, while reaffirming a Buy rating. This revision reflects tempered expectations for the company's fiscal years 2024 and 2025.
Despite this, the firm recognized strength in Hillenbrand's Advanced Process Solutions division and noted the stock as undervalued. These are the recent developments in Hillenbrand's business.
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