Fortive Continues To Add Recurring Revenue, Says Bullish Raymond James

Fortive Corp FTV's showing in the fourth quarter indicates upside to 2019 estimates, according to Raymond James.

The Analyst

Raymond James’ Brian Gesuale maintains an Outperform rating on Fortive with an unchanged $85 price target. 

The Thesis

Fortive finished the year with revenue of $1.8 billion, in line with Street expectations. The company posted EPS of 91 cents versus the consensus estimate of 85 cents. 

The Fluke subsidiary grew by mid-single digits, GVR was up mid-teens and the company delivered a surprisingly strong performance in China, Gesuale said in a Friday note, adding that the company also performed well in North America.

Fortive is likely to generate mid-single digit growth in China, supported by strength in Fluke and GVR as well as growth in Tektronix, the analyst said. 

Fluke, GVR and EMC are expected to drive organic growth in 2019, Gesuale said. 

Fortive delivered strong execution in 2018, and its initial 2019 guidance “appears to have an upward bias” provided that markets like China and Western Europe do not witness significant economic deterioration, the analyst said. 

The company has opportunities to grow, with recent transactions gaining traction, more recurring revenue being added to its mix, a model incorporating more solutions content and offerings that are being linked to attractive themes like transportation technologies, machine to machine, industrial internet, and internet of things, according to Raymond James. 

Price Action

Fortive shares were up 0.27 percent at $77.03 at the time of publication Monday. 

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Photo courtesy of Fortive.