Yahoo Finanza Morgan Stanley Raises Nordson’s Target Price to $270, Says 4Q Earnings Miss A Bump in the Road
Morgan Stanley raised their base stock price forecast on Nordson to $270 from $230, reiterating an “Equal-weight” rating on the Westlake, Ohio-based medical device manufacturer and said fourth-quarter earnings miss was a bump in the road, but the 2022 outlook seems in-line.
Last week, the maker of adhesives and industrial coatings reported quarterly earnings of $1.88 per share, missing the Wall Street consensus of $2.10 per share, also down from $1.59 per share seen in the same period a year earlier. In addition, the company said its revenues rose slightly to $599.25 million during the quarter ended October 2021 from $558.53 million. That was also below the market expectations of $581.8 million.
“Nordson (NDSN) reported 4Q results that were slightly below expectations. Commentary on the end-market trajectory is relatively constructive, though management pointed to the potential for growth rate deceleration in 2H22, but we think this is fairly understandable vs. current comps. Raising our price target to $270,” noted Connor Lynagh, equity analyst at Morgan Stanley.
“We are updating our estimates to account for 4Q actuals and FY22 guidance. The resulting changes are limited, as guidance was in line with our prior expectations – FY22 revenue and EBITDA are essentially unchanged. Notably, we have raised ATS revenue growth by ~200bps, although EBIT margins are unchanged at ~26%, or ~$335MM. However, commentary on the call seemed to confirm that NDSN’s medical and electronic end markets (~50% of revenue) are earlier in the cycle than we had previously assumed. Therefore, we are raising our target valuation assumption for NDSN by ~15%, to ~20.0x EV/EBITDA on 2022E EBITDA vs. our prior target multiple of 17.0x, which is more consistent with other IET companies in our coverage and more commensurate with the stock’s recent trading range.”
Morgan Stanley gave the stock price forecast of $325 under the bull scenario and $180 under the worst-case scenario. Other equity analysts also updated their stock price outlook. Jefferies raised the target price to $290 from $275. D.A. Davidson lifted the target price to $300 from $275. Berenberg upped the target price to $330 from $297.
Seven analysts who offered stock ratings for Nordson in the last three months forecast the average price in 12 months at $293.83 with a high forecast of $330.00 and a low forecast of $270.00. The average price target represents an 18.52% change from the last price of $247.92.
Of those seven equity analysts, five rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks. On Friday, Nordson shares closed 0.17% lower at $248.43. However, the stock surged over 23% so far this year.
“Mixed cyclical momentum: Nordson (NDSN) had one of the most resilient earnings performances of peers in 2020, largely on the back of its medical and consumer-oriented businesses. Thus, growth from here is less substantial vs. some more-cyclical peers,” Morgan Stanley’s Lynagh added.
“Solid longer-term secular trends in ATS: NDSN highlights the potential for 2x GDP growth in its Advanced Technology Systems segment, which seems likely to see mid-high single-digit growth on a durable basis, in our view. Fairly valued in light of major factors: We don’t see major scope for upward revisions beyond recent updates, though we think NDSN’s valuation vs. peers is defensible due to its longer-term growth opportunity, driving a balanced risk-reward.”
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This article was originally posted on FX Empire
