Nordson Is A Core Industrial Tech Holding, DA Davidson Says Ahead Of Q1 Print

A D.A. Davidson analyst made a bullish case for Nordson Corporation NDSN, a manufacturer of adhesive dispensers, ahead of the Ohio-based company's first-quarter report after the close Thursday. 

The Analyst

D.A. Davidson analyst Matt Summerville initiated coverage of Nordson shares with a Buy rating and a 12-18-month price target of $160, suggesting roughly 15-percent upside from current levels.

The Thesis

Nordson's long-term secular factors, sound execution, consistent free cash flow generation, sizable aftermarket/consumable revenue stream and geographic end-market diversity all serve to make it a solid, core industrial technology holding, Summerville said in a Wednesday note. (See the analyst's track record here.) 

Nordson possesses significant market share and strong brand equity across all three reportable business segments, the analyst said: Adhesive Dispensing Systems, Advanced Technology Systems and Industrial Coating and Automotive Systems.

Despite challenging organic comparisons in some business segments, Nordson is on track to generate solid organic sales growth, further operating margin improvement and earnings per share expansion, Summerville said. 

"We also believe current consensus views may prove conservative based on our organic growth outlook, an incrementally more favorable FX backdrop and potential benefits from recent tax reform," he said. 

D.A. Davidson estimates 2018 earnings of $6.45 per share, including Q1 earnings per share of $1.37 compared to 86 cents one year ago. The research firm projects total organic sales growth of 4-5 percent, acquisitions-related accretion of 10 cents and about 3.5 points of forex tailwind.

For 2019, D.A. Davidson estimates earnings per share of $6.90.

The Price Action

Nordson shares are up about 16 percent over the past year.

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Earnings Scheduled For February 22, 2018