On Thursday, DA Davidson adjusted its outlook on Hillenbrand (NYSE:HI), a diversified industrial company, by reducing its price target to $54 from the previous $59, while reaffirming a Buy rating on the stock. The revision reflects a tempered expectation for the company's fiscal years 2024 and 2025, despite noting some positive developments within its business segments.
The firm recognized strength in the Advanced Process Solutions (APS) division, highlighting robust demand for additive manufacturing and parts. Progress on large polymer projects that had been postponed is now underway, and the integration of recent acquisitions is proceeding effectively. The APS segment also reports full utilization of its test labs for polymer and recycling operations, with promising sales pipeline metrics.
The Material Handling Systems (MTS) segment has shown signs that demand for injection molding may be improving, and orders for hot runners have reached a plateau, albeit at reduced levels. However, the analyst expressed reservations about the strategic fit of the MTS segment within Hillenbrand's broader portfolio.
The report concluded by noting Hillenbrand's stock as undervalued, maintaining the Buy recommendation despite the lowered price target to $54. This adjustment reflects a cautious yet optimistic view of the company's performance in the coming years.
InvestingPro Insights
As Hillenbrand navigates its fiscal years with DA Davidson's adjusted outlook in mind, real-time data from InvestingPro provides additional context for investors. The company's market capitalization stands at $2.95 billion, indicating a significant presence in the industrial sector. Notably, the stock is trading at a low P/E ratio relative to near-term earnings growth, with a current P/E ratio of 35.08 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 20.47. This may suggest an attractive valuation for investors considering the company's earnings potential.
The revenue growth figures are also promising, with a 20.06% increase in the last twelve months as of Q2 2024, indicating a robust expansion in sales. Furthermore, Hillenbrand has maintained a consistent dividend payment streak, increasing its dividend for 17 consecutive years, which could be a sign of financial stability and a commitment to returning value to shareholders. The current dividend yield stands at 2.15%, which may appeal to income-focused investors.
InvestingPro Tips highlight that Hillenbrand's stock has taken a considerable hit over the last week, with a one-week price total return of -14.49%, and has fared poorly over the last month, with a one-month price total return of -14.51%. This could present a buying opportunity for those who believe in the company's long-term prospects. Additionally, the stock's RSI suggests it is in oversold territory, which might indicate a potential reversal or correction in the near future.
For investors seeking a deeper analysis, InvestingPro provides a wealth of additional tips that could further inform investment decisions. For those interested in exploring these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the promise of profitability this year and a track record of income generation over the last twelve months, Hillenbrand may warrant a closer look for those seeking industrial sector exposure.
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