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Veralto agreed to buy Cleanwater1, a firm that specializes in removing contaminants and disinfecting water using chlorine. The deal adds about 25,000 installed units to Veralto's network, which is the core of its business model.
This acquisition fits the company's strategy of buying businesses with a large base of equipment already in the field. These units require constant supplies and service, creating a steady stream of high-margin sales that continue long after the initial sale.
Source: PRNewsWire
RBC Capital kept its rating at Sector Perform but raised its price target from $100 to $109. UBS also moved its target up to $104 while keeping a Neutral rating. These minor adjustments suggest analysts are comfortable with the company's current path but do not see a major reason to change their overall stance. The average target among all analysts is now $110, which is about 10 percent higher than the current stock price.
Source: RBC Capital
Veralto reported a strong second quarter, with revenue reaching about 1.47 billion dollars. Core sales, which strip out the effects of acquisitions and currency swings, grew 4.2 percent. This falls right in the middle of the 3 to 5 percent range the company needs to hit to prove its water and packaging businesses are as steady as expected.
Profits were also better than expected, though about 5 cents of the earnings per share came from a one-time recovery of past tariffs. Even without that boost, the business is running efficiently with adjusted operating margins at 24.6 percent. The company generated 328 million dollars in cash, which it is already using to fund new acquisitions.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Veralto purchased Alfaa UV, a company that uses ultraviolet light to treat water for industrial customers. This technology is an alternative to chemical treatments and is often used in sectors with strict purity requirements.
This move helps Veralto expand its presence in faster-growing markets. By adding more specialized treatment options to its portfolio, the company can sell more solutions to its existing industrial customers while attracting new ones in regions where UV treatment is becoming more common.
Source: PRNewsWire
Analysts raised their price targets for Veralto following the company's strong second-quarter earnings report in late July. Six of the 13 analysts rate the stock a buy, and the average target of $110 suggests a 10% upside.
Management has cleared its own profit targets for eight straight quarters, suggesting they set conservative bars and have a firm handle on their costs.
| Expectation | |
|---|---|
| EPS | $1.08 |
| Revenue | $1.50B |