Market Overview

The Sell-Side Bulls Are Out In Force For Gardner Denver With A Slew Of Positive Initiations

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Gardner Denver Holdings Inc (NYSE: GDI), an industrial machinery maker, completed its initial public offering in early May.

A slew of sell-side reports were released Tuesday, with the general consensus being bullish.

Credit Suisse: Neutral

Credit Suisse's Julian Mitchell initiated coverage of Gardner Denver's stock with a Neutral and $25 price target, despite holding a positive view of the company's outlook.

Gardner Denver could see an 11 percent organic sales compounded annual growth rate through 2018, which is notably above the sector average of just 3 percent, Mitchell said, adding that this outlook is already well understood by the investment community.

The company's organic growth is expected to peak in the third quarter of 2017, making it difficult to assign a higher valuation, the analyst said. Gardner Denver's balance sheet leverage (2017E ND/EBITDA) stands at 3.4x, above the sector average of around 1.5x, which suggests little room for non-organic growth.

Stifel: Buy 

Stifel's Nathan Jones initiated coverage of Gardner Denver's stock with a Buy and $27 price target.

" ... We believe near-term revenue tailwinds exit from the increasing U.S. rig count and impending well completions that are expected to drive a strong cyclical recovery in 2017-2018," Jones said.

Gardner Denver is exiting what is likely the worst cyclical trough in three decades, meaning that shares could trade at a premium at this point in the cycle, the analyst said.

Citi: Buy 

Citi's Andrew Kaplowitz initiated coverage of Gardner Denver's stock with a Buy and $27 price target.

The company has made the necessary investments to transform itself despite market declines, Kaplowitz said.

While several market headwinds have offset many of the benefits to date, this negative trend appears to be subsiding, the analyst said. The stock's valuation is "not expensive," which is uncommon for an industrial company, he said.

Baird: Outperform

Baird's Michael Halloran initiated coverage of Gardner Denver's stock with an Outperform and $28 price target.

Similar to Halloran's peers, the analyst is bullish on the company, given its exposure to an expected cyclical upturn in oil and gas and the broader and industrial markets.

The recovery of Gardner Denver's energy sector will prove to be the primary focal point for investors and could drive double-digit market growth through next year, as the industry recovers after years of significant declines, Halloran said.

The company boasts best-in-class adjusted EBITDA margins above 20 percent, despite volume headwinds over the past few years. But the ongoing "improvement journey" still has plenty of room ahead and is driven by restructuring initiatives, aftermarket gains an improving culture and benefits from new products introductions, according to Baird.

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Latest Ratings for GDI

DateFirmActionFromTo
Apr 2020CIBCDowngradesOutperformerNeutral
Feb 2020Credit SuisseMaintainsNeutral
Jan 2020UBSMaintainsBuy

View More Analyst Ratings for GDI
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