Benzinga - by Nabaparna Bhattacharya, Benzinga Editor.
Stephens analyst Tommy Moll reiterated an Overweight rating on ESCO Technologies Inc (NYSE: ESE) with a price target of $120.
The analyst considers ESCO Technologies an underappreciated global provider of highly engineered products/ solutions for mission-critical applications in markets benefiting from substantial, enduring tailwinds.
Moll is remarkably upbeat about the company's high-quality portfolio of filtration/fluid control/pyrotechnics and close-tolerance machined parts (bushings/pins/sleeves).
The analyst thinks ESE is moving toward double-digit organic earnings growth, which should, in tandem with sharper working capital focus, augment ROIC to double-digits over time.
Given today's low-leverage (
In the longer term, the analyst sees potential for ESE to establish a more rhythmic M&A program, consistently contributing a modest amount of growth most years.
However, to have significant M&A capacity, the company is assumed to have ~10x EBITDA acquisition multiples and a pro forma 2.0x-2.5x leverage ratio (vs.
Overall, Moll expects more investors to gravitate to ESE's highly visible growth in electric utilities and commercial aerospace.
Price Action: ESE shares are trading higher by 1.58% to $106.58 on the last check Monday.
Latest Ratings for ESE
| Sep 2021 | Sidoti & Co. | Upgrades | Neutral | Buy |
| Jul 2019 | Stephens & Co. | Initiates Coverage On | Equal-Weight | |
| Aug 2018 | B. Riley Securities | Maintains | Buy | Buy |
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