On Friday, Baird made a revision to its stance on Nordson (NASDAQ:NDSN), downgrading the stock from Outperform to Neutral and reducing the price target significantly to $237 from the previous $294. The adjustment comes in response to the company's fourth-quarter earnings, which surpassed expectations due to upside in Adhesive Dispensing Systems and favorable below-the-line items. Despite this, the firm's guidance for the first quarter was less optimistic than anticipated, prompting a cautious outlook.
The company's forecast for fiscal year 2025 also influenced the downgrade, with the guidance being more heavily weighted towards the second half of the year. Baird believes that the lower end of the guidance range is realistic. The commentary on end-markets by Nordson suggests that growth may remain subdued throughout fiscal 2025, with limited potential for a resurgence until at least the latter half of fiscal 2025 or possibly fiscal 2026.
While the long-term prospects for Nordson are still deemed robust, characterized by a strong growth profile and top-tier margins, Baird is adopting a more conservative approach for the near term. The firm has expressed an intention to re-engage more actively with Nordson as the opportunities for growth and clear paths to acceleration emerge.
Baird's stance reflects a tempered expectation for Nordson's performance in the immediate future. The firm acknowledges the company's solid long-term potential but is opting for a wait-and-see strategy as it monitors Nordson's progress and the appearance of catalysts that may drive growth and justify a more optimistic rating.
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