On Monday, DA Davidson made an adjustment to Modine Manufacturing’s (NYSE:MOD) financial outlook, reducing the price target to $140 from the previous $155 while retaining a Buy rating on the company’s shares. The revision followed a recent group call with Modine’s senior leaders including President and CEO Neil Brinker, EVP and CFO Mick Lucareli, and VP of IR, Treasury, and Tax Kathy Powers.
The firm’s analysts expressed continued optimism about Modine’s future, particularly highlighting the company’s potential in the direct current (DC) demand environment. They anticipate that technological advancements, expansion into adjacent markets, and new customer acquisitions will drive Modine’s growth. Additionally, the analysts predict that Modine will successfully accelerate the transformation of its Powertrain (PT) segment. With annual revenue of $2.54 billion and an EBITDA of $358.4 million, the company demonstrates substantial operational scale. Get deeper insights into Modine’s growth potential with a comprehensive Pro Research Report, available exclusively on InvestingPro.
This transformation is expected to result in robust organic revenue growth and double-digit increases in both earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal years 2026 and 2027. Despite the positive outlook, DA Davidson has adjusted its fiscal year 2025 and 2026 estimates to reflect the current softness in the active vehicular market, which is part of Modine’s PT business segment.
The analysts’ commentary from DA Davidson emphasized the company’s strengths and the steps it is taking to enhance its business model. "We hosted a group call with MOD’s senior leaders and came away still bullish on a number of fronts," the analysts stated. They believe that Modine’s strategic initiatives will culminate in significant growth over the next few years.
The price target adjustment reflects a nuanced view of Modine’s prospects, taking into account both the challenges and opportunities that lie ahead. The analysts’ maintained Buy rating indicates their belief that Modine’s stock remains a favorable investment despite the near-term headwinds facing the PT segment. Trading at a P/E ratio of 25.8 and maintaining a strong return on equity of 20%, Modine shows promising fundamentals. InvestingPro analysis suggests the stock is currently overvalued, with 11 additional ProTips available to subscribers for making informed investment decisions.
In other recent news, Modine Manufacturing has announced a definitive agreement to acquire AbsolutAire, a Michigan-based manufacturer specializing in direct-fired heating, ventilation, and make-up air systems. This acquisition, expected to close in April 2025, aims to enhance Modine’s product offerings and expand its presence in the commercial, industrial, and food service markets. AbsolutAire reported annual sales of $25 million in 2024, and its integration is expected to bolster Modine’s Heating and Indoor Air Quality businesses. DA Davidson has maintained its Buy rating on Modine with a $155 price target, citing the acquisition as a strategic fit that aligns with Modine’s growth strategy.
Additionally, Oppenheimer has reiterated an Outperform rating on Modine with a $145 price target, highlighting the company’s strong outlook for data center growth and a robust mergers and acquisitions pipeline. Modine’s management has expressed confidence in the company’s future, supported by positive customer feedback and an expanding project pipeline. The company is also focused on transforming its Powertrain portfolio to achieve margin expansion and has announced a share buyback program. Both DA Davidson and Oppenheimer view the current valuation of Modine’s shares as modest, suggesting potential for future growth.
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