Thursday, Jefferies downgraded Middleby Corp (NASDAQ:MIDD) shares from Buy to Hold, adjusting the price target to $160 from $170. The firm's analyst cited a recalibration of the company's valuation in light of its recent performance trends and market positioning. According to InvestingPro data, Middleby currently trades at an EV/EBITDA multiple of 23.15x, with a market capitalization of approximately $33.6 billion.
Middleby, a leading provider of commercial cooking equipment, has seen its stock trade at a discount compared to historical averages. The analyst noted that Middleby's shares are currently valued at approximately 11 times EBITDA, which represents a roughly 20% discount to its average before 2023 and about a 30% discount to the market.
For deeper insights into Middleby's valuation metrics and comprehensive financial analysis, InvestingPro subscribers have access to over 30 key financial indicators and expert-curated ProTips.
The revised price target is based on a 12 times multiple of the firm's projected 2025 EBITDA. This adjustment reflects a modest premium over the current trading valuation but remains significantly lower than the company's historical average.
The rationale behind this is the perceived difficulty in predicting when Middleby's valuation multiple might improve. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, with particularly strong profitability metrics.
The analyst pointed out that while Middleby had previously enjoyed a premium valuation relative to the market, this has not been the case for the last two years. This change in market sentiment is attributed to Middleby's lower organic growth and a strategic focus on acquisitions rather than internal capital development.
InvestingPro data reveals the company's revenue growth has been challenged, with a decline of 8.76% in the last twelve months, though it maintains healthy profit margins of 39%.
The new target multiple aims to acknowledge the current market valuation while also considering the challenges associated with forecasting a potential re-rating of the company's stock. The analyst's comments suggest a cautious outlook on the timing and likelihood of a valuation multiple increase for Middleby in the near future.
In other recent news, Rockwell Automation (NYSE:ROK) has experienced a challenging fiscal year in 2024, with a 9% decline in sales to $8.3 billion. Despite this, the company is implementing cost reduction strategies and introducing new products, such as the LOGICS SIS process safety controller and Vision AI solution.
For fiscal 2025, Rockwell Automation projects a potential sales range between a 4% decline and a 2% increase, with a 10% growth in annual recurring revenue and a target of $250 million in cost savings.
In analyst news, Rockwell Automation's stock has been upgraded by KeyBanc from Sector Weight to Overweight and by Barclays (LON:BARC) from Underweight to Equalweight. These upgrades reflect a positive outlook on the company's future earnings growth and margin expansion. However, Goldman Sachs (NYSE:GS) maintained its Sell rating on the shares, citing concerns about the company's ambitious order acceleration goals for the first half of 2025.
These are recent developments and the situation may continue to evolve.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.