- William Blair analyst Lawrence De Maria re-initiated coverage on SPX Technologies Inc SPXC with an Outperform rating.
- The analyst sees the company's internal operating improvements, strong balance sheet and value-accretive acquisition strategy, and steady organic growth outlook as favorable factors for valuation upside over time.
- The analyst believes SPXC has successfully transformed into a more simplified and cohesive company through 12 higher-margin business acquisitions, the sale of cyclical businesses, and the management of legacy liabilities.
- SPXC is presently benefiting from strong secular tailwinds, such as a large pipeline of infrastructure upgrades, a regulatory push toward energy efficiency, and government stimulus.
- The analyst sees that SPXC has efficiently increased its segment margins despite supply chain disturbances and labor shortages.
- De Maria expects the Infrastructure Investment and Jobs Act (IIJA) of $1.2 trillion, set to accelerate through 2026, to support top-line growth across 75% of SPXC's portfolio.
- SPXC is well positioned to exceed its 2025 revenue target of $2 billion, assuming 5% organic growth and an annual accretive M&A of $100 million.
- De Maria expects substantial margin expansion over the next few years, with HVAC business exceeding the upper end of the company's long-term margin target of 14% to 16% and D&M business margins reaching the lower end of SPXC's long-term target range of 22% to 24%, on favorable product mix.
- Price Action: SPXC shares are trading lower by 0.22% at $66.67 on last checked Monday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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