Investing.com -- Atmus Filtration Technologies Inc (NYSE:ATMU) shares were rising after a number of Wall Street firms started covering the stock after its initial public offering.
Shares of the supplier of filtration products for commercial vehicles and equipment rose 2.5%.
JPMorgan analysts initiated it with an Overweight rating and $28 price target. The stock was trading Tuesday around $20.02 a share. JPMorgan said Atmus has the potential to accelerate growth by expanding in its core and adjacent businesses. It sees steady cash flows and a solid balance sheet helping Atmus enter the broader filtration market through deal activity. It also sees a deeply discounted valuation versus peer companies, "while its planned expansion into industrial filtration should bridge the valuation gap vs. direct filtration peers over time."
BofA Securities analysts initiated coverage with a buy and a $25 price target. The analysts explained in a research note that the Cummins (NYSE:CMI) spinoff "will further build on its strengths. We forecast right-sizing costs following the spin to drive 30+% incremental EBITDA margins (2022-25E). Atmus plans to use its free cash flow to transform and diversify into adjacent non-vehicle filtration markets."
Wells Fargo started coverage with an overweight rating and a $24 price target. The analysts noted that Atmus is pivoting to industrial sectors at a critical time, as climate change efforts transition mobile equipment away from internal combustion engines. "Even under a faster electrification adoption scenario in 2030, we estimate a 0.5% share of the Industrial OE TAM would more than offset the Mobile OE revenue headwind," they said in a note.