Oppenheimer analyst Noah Kaye reiterated an Outperform rating on the shares of EnerSys (NYSE:ENS) and raised the price target from $110 to $119.

The analyst said ENS investor day provided a blueprint for doubling EPS within four years through accelerating growth and improving mix/OpEx leverage.

The company targets FY23-27 revenue CAGR of 8-10% and cumulative FY24-27 free cash flow of $1.2 billion - 1.6 billion at 95% conversion and $100 million -120 million average annual capex.

Citing need for supply security and design control, ENS announced an MoU with Verkor to develop a domestic Li-ion gigafactory.

The analyst believes the companies are contemplating $500 million capex, with government support providing a significant share of investment.

According to the analyst, management sees new small cell and extended backup offerings driving 6-8% topline CAGR through FY27.

The analyst views faster innovation cycles and higher topline CAGR can drive future re-rating, while viewing operating leverage as key to the stock nearer term.

The analyst sees ENS as a differentiated provider of stored energy solutions for specific industrial applications that is transitioning into a full provider of power solutions.

The analyst opined that ENS is well-positioned to come through near-term macro challenges and move forward on capturing key growth opportunities in transportation, telecom, and other markets.

Price Action: ENS shares are trading lower by 1.043% at $104.72 on the last check Friday.