Resideo Technologies Gains 5% On Norfolk Acquisition


Shares of Resideo Technologies closed 4.8% higher on Thursday after the home comfort and security solutions provider announced the acquisition of Norfolk Wire & Electronics for an undisclosed amount.

Resideo (REZI) said the product and services of privately held Norfolk will complement Resideo’s offerings and expand its reach into attractive growth markets in the mid-Atlantic region. The addition of Norfolk would also strengthen the company’s “local bulk product availability and custom cutting services,” the company said. After the acquisition, Norfolk will become a part of Resideo’s ADI Global Distribution business.

The company’s CEO Jay Geldmacher said, “ADI is core to Resideo’s long-term growth, and this acquisition aligns with our strategy to identify and execute on tuck-in acquisitions that accelerate ADI’s expansion in adjacent categories.” (See Resideo Technologies stock analysis on TipRanks)

On March 11, Oppenheimer analyst Ian Zaffino maintained a Hold rating on the stock following the company’s investor day. In a note to investors, the analyst said that “new management is highly focused on operational efficiencies and will implement cost accountability to drive margins and improve cash flow. Nevertheless, management acknowledged its goal calling for ~500bps of gross margin expansion is ambitious; in fact, its ~47% P&S gross margin target is higher than most product and control peers.”

Meanwhile, the Street has a Hold consensus rating on the stock based on 5 Holds. The average analyst price target of $30 implies upside potential of about 1.4% to current levels. Shares have gained over 511% in one year.

On TipRanks’ Smart Score ranking, Resideo Technologies gets a 4 out of 10, suggesting that the stock is likely to perform in-line with market expectations.

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