Wabtec's Multi-Year Growth Algorithm Is 'Underappreciated,' Says This Analyst

Wabtec's Multi-Year Growth Algorithm Is 'Underappreciated,' Says This Analyst
  • Raymond James analyst Patrick Tyler Brown initiated coverage of Westinghouse Air Brake Technologies Corp WAB (Wabtec) with an Outperform rating and a price target of $103, implying an upside of 8.4%.
  • The analyst believes Wabtec’s multi-year growth algorithm is underappreciated owing to a slew of accelerating secular tailwinds, including a substantial runway for locomotive fleet renewal needs and global decarbonization benefits.
  • Brown suspects early signs of a cyclical recovery in key N.A. freight markets — rising locomotive utilization/railcars in storage declining — should reignite revenue growth into FY23-FY25 off cyclical lows, notably different from the truck machinery cycle.
  • The analyst appreciates Wabtec’s heightened European exposure and the stock’s historically strong correlation to movements in commodity prices, bears monitoring closely, which he sees a positive risk/reward with the stock trading at ~17x 2023 EPS estimate.
  • Price Action: WAB shares are trading higher by 0.49% at $95.13 on the last check Thursday.

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