There’s a lot to be optimistic about in the Conglomerates sector as 2 analysts just weighed in on Kennametal (NYSE: KMT) and Stoneridge (NYSE: SRI) with bullish sentiments.
Kennametal (NYSE: KMT)
In a report released today, Matthew Gall from Barrington maintained a Buy rating on Kennametal (NYSE: KMT), with a price target of $53. The company’s shares closed yesterday at $36.45.
Gall observed:
“We are expecting positive adjusted operating margin improvement due to expected price increases and productivity gains by the company. We are estimating sales of $594 million in Q3/18, an increase of more than 12% YOY, with adjusted EPS of 0.67. FactSet consensus estimates call for sales of $599 million and adjusted EPS of $0.72. KMT’s markets are seasonally slow during the first calendar (third fiscal) quarter. Outlook: Kennametal is looking for FY/18 organic sales growth of 9‐11%, up from a prior range of 5‐7%. End market strength, notably in oil & gas and general engineering, has increased Kennametal’s growth expectations. Full‐year adjusted EPS guidance was raised to $2.40‐2.70 following Q2/18 results from $2.30‐2.60 and includes an adverse impact of $0.15‐0.20 because of U.S. tax reform. The effective tax rate is now expected to be 22‐ 25% compared to 18‐22% expected previously.”
According to TipRanks.com, Gall is a 4-star analyst with an average return of 20.9% and a 61.9% success rate. Gall covers the Industrial Goods sector, focusing on stocks such as Nordson Corp, Kadant Inc, and Woodward.
Currently, the analyst consensus on Kennametal is Moderate Buy and the average price target is $50.14, representing a 37.6% upside.
In a report issued on April 19, Wells Fargo also reiterated a Buy rating on the stock with a $48 price target.
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Stoneridge (NYSE: SRI)
In a report released today, Gary Prestopino from Barrington maintained a Buy rating on Stoneridge (NYSE: SRI), with a price target of $35. The company’s shares closed yesterday at $26.33.
Prestopino said:
“We believe this mix shift can total in excess 80% of sales over a five‐year basis. The acquisition of Orlaco adds solid growth potential through the MirrorEye mirror replacement system. Since July 2015, Stoneridge has partnered with Orlaco to jointly develop the MirrorEye mirror replacement system, a safety and fuel economy solution for the commercial vehicle market that integrates Orlaco’s camera technology with Stoneridge’s software capabilities. Within Stoneridge’s traditional OEM sales channels, MirrorEye represents a $250 million annual OEM market opportunity. Expected OEM launches of MirrorEye are scheduled for 2020.”
According to TipRanks.com, Prestopino is a 2-star analyst with an average return of 0.6% and a 43.5% success rate. Prestopino covers the Services sector, focusing on stocks such as Kar Auction Services Inc, Student Transportation, and Liquidity Services.
Currently, the analyst consensus on Stoneridge is Moderate Buy and the average price target is $31, representing a 17.7% upside.
In a report issued on April 23, C.L. King also initiated coverage with a Buy rating on the stock with a $34 price target.
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