On Tuesday, Goldman Sachs initiated coverage on ATS Corp (NYSE: ATS) stock with a Sell rating, setting a price target of $34.00.
The firm cited concerns about the company's growth prospects, noting that while automation is a long-term trend, ATS Corp's end markets are currently experiencing a cyclical pause. The analyst pointed out that, apart from the Life Sciences sector, order trends in areas such as Transportation are declining or remain muted.
ATS Corp's organic growth is expected to decline in FY25, with Goldman Sachs projecting a 4% decrease. The firm also noted that despite a positive outlook on US manufacturing and large-scale project orders for electrical, HVAC, and automation equipment providers, ATS is unlikely to reap the same benefits as its peers due to its lack of exposure to semiconductor capital expenditures and a later cycle exposure to electric vehicle investment.
Even though ATS is anticipated to exceed near-term earnings expectations with a forecasted fourth-quarter EPS of $0.65, Goldman Sachs predicts that the company's FY25 EPS will likely fall short of consensus expectations, which are set at $2.50. The recommendation to sell is based on the expectation that ATS Corp will underperform compared to Goldman Sachs' coverage universe over the next 12 months.
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