On Friday, Fortive Corporation (NYSE:FTV) received an upgrade in its stock rating to Outperform from Neutral by Mizuho, with a revised price target set at $90, up from the previous $80. The upgrade follows Fortive's announcement of its plans to proceed with a tax-free spin-off of its Precision Technologies segment, referred to as "NewCo."
The company conducted a call today to discuss the spin-off, which aims to form two independent publicly traded entities, each with distinct business models and investment strategies.
NewCo is expected to capitalize on secular growth trends, while the remaining company, RemainCo FTV, will concentrate on generating high-quality recurring growth, which makes up about 50% of its business.
Fortive's guidance for the third quarter and the full fiscal year 2024 has been reaffirmed, indicating confidence in the company's current financial trajectory. Additionally, Fortive has emphasized its commitment to share repurchases as a priority until the closure of the transaction, which includes a moratorium on deals.
The anticipated completion of the spin-off transaction is slated for the fourth quarter of 2025. This strategic move is intended to provide each company with the ability to focus on their respective areas, optimizing their growth potential and investment strategies.
In other recent news, Fortive Corporation plans to spin off its Precision Technologies segment into a new independent public company, NewCo, by the end of 2025. This move is expected to streamline Fortive's operations, allowing for a sharper focus on its Intelligent Operating Solutions and Advanced Healthcare Solutions segments.
The announcement was accompanied by leadership changes, with Olumide Soroye and Tami Newcombe stepping into the roles of President and CEO of Fortive and NewCo, respectively.
Fortive's Q2 revenues were reported at $1.52 billion, a 2% increase year-over-year, with earnings per share at $0.93, slightly exceeding consensus estimates. Wolfe Research recently revised its rating for Fortive stock from "Outperform" to "Peer Perform," following the spin-off announcement. However, Fortive has sustained a Buy rating from TD (TSX:TD) Cowen and an Outperform rating from Baird based on its strategic decisions.
Additionally, Fortive's Advanced Sterilization Products division, in partnership with PENTAX Medical, received FDA clearance for its new ULTRA GI™ Cycle for the STERRAD™ 100NX Sterilizer with ALLClear™ Technology. This innovative sterilization method uses hydrogen peroxide gas plasma to sterilize duodenoscopes, aiming to enhance patient safety in healthcare settings. These are the recent developments in Fortive's business operations and strategies.
InvestingPro Insights
Following the strategic move by Fortive Corporation (NYSE:FTV) to spin off its Precision Technologies segment, Mizuho has upgraded the company's stock rating to Outperform. Fortive's latest financial metrics from InvestingPro provide a deeper understanding of the company's valuation and performance. With a market capitalization of $25.5 billion and a high P/E ratio of 28.88, Fortive trades at a premium relative to its near-term earnings growth. Despite this, the company has demonstrated impressive gross profit margins of 59.67% over the last twelve months as of Q2 2024, underscoring its operational efficiency.
InvestingPro Tips identify the company's moderate level of debt and its profitability over the last twelve months as key financial health indicators. Analysts predict Fortive will be profitable this year, a sentiment supported by a robust operating income margin of 18.97%. For investors seeking additional insights, there are 13 more InvestingPro Tips available, which include further analysis and projections for Fortive's financial future. These tips can be explored in detail at InvestingPro's dedicated Fortive page.
Investors may also note that while 13 analysts have revised their earnings downwards for the upcoming period, the company's commitment to share repurchases and the reaffirmation of its financial guidance suggest a confidence in its strategic direction and financial stability. The anticipated spin-off, set for the fourth quarter of 2025, is poised to unlock value for both the new entities, NewCo and RemainCo FTV.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.