On Wednesday, RBC (TSX:RY) Capital Markets updated its financial outlook for shares of Atkore (NYSE:ATKR), a leading manufacturer of electrical, safety, and infrastructure solutions. The firm raised its price target on the company's stock to $102 from the previous $93, while maintaining a "Sector Perform" rating. According to InvestingPro analysis, Atkore appears undervalued, trading at an attractive P/E ratio of 7.3x while maintaining strong profitability with a 33.7% gross margin.
The adjustment followed investor meetings on December 2-3 in New York City and Boston, where Atkore's CEO and CFO reiterated the company's position and outlook, which aligned with the sentiments expressed during the earnings call on November 21.
RBC Capital's analyst highlighted that the discussions reinforced the bullish stance on Atkore's future, especially considering the company's F2025 $500 million EBITDA guidance, which the CEO believes is largely secured despite the mixed results in the fourth fiscal quarter of 2024.
Despite encountering seven incremental negative factors, Atkore's stock has shown resilience, with a 12% rally since the November 21 earnings call. This positive market reaction appears to reflect investor confidence in the company's strategic growth initiatives.
InvestingPro data reveals that management has been actively supporting the stock through aggressive share buybacks, though the stock has experienced a significant 33% decline over the past six months. For deeper insights into Atkore's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The key messages from the recent investor meetings centered on the four to five growth levers that Atkore is actively managing to drive the company forward. These growth strategies are crucial to the company's performance and are expected to contribute to its upward trajectory.
With the price target increase, RBC Capital now sees a 9% potential upside for Atkore shares. This new target reflects the firm's constructive view on the company's prospects and its ability to navigate through the challenges while capitalizing on growth opportunities. The company maintains a healthy financial position with a current ratio of 2.98, indicating strong liquidity, and operates with a moderate debt-to-equity ratio of 0.62.
In other recent news, Atkore International Group Inc (NYSE:ATKR). reported mixed Q4 FY2024 results, with net sales of $3.2 billion, adjusted earnings per share at $14.48, and adjusted EBITDA of $772 million. Anticipating net sales between $2.9 billion and $3.2 billion for FY2025, Atkore projects its adjusted EBITDA to be between $475 million and $525 million.
Amid pricing pressures in the PVC and steel conduit markets, Atkore has outlined growth strategies focusing on solar torque tubes, water-related products, global mega projects, and regional service centers.
Loop Capital has lowered its price target for Atkore from $130 to $115, citing PVC pricing and competitive pressures, but maintains a Buy rating. The firm suggests the company's new guidance could serve as a "clearing event," reinforcing the belief that FY25 will showcase a sustainable earnings level, estimated around $500 million in EBITDA.
B.Riley, however, downgraded Atkore's stock from Buy to Neutral and reduced the price target from $135 to $84, following lower than expected Q4 FY2024 results and future guidance. Despite these recent developments, Atkore continues to demonstrate a commitment to shareholder returns, having repurchased over $1.3 billion in stock and introduced a quarterly cash dividend.
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