Veralto Corporation: A Year of Strong Stock Performance Amid Challenges
Veralto Corporation (VLTO), based in Waltham, Massachusetts, boasts a market cap of $26.8 billion and specializes in advanced solutions for water analytics, treatment, marking, coding, packaging, and color management. The company operates through its Water Quality and Product Quality & Innovation segments, serving various industries including municipal utilities, food and beverage, and pharmaceuticals on a global scale.
Over the past 52 weeks, VLTO shares have significantly outperformed the broader market. With a remarkable increase of 45.8%, VLTO has surpassed the S&P 500 Index’s ($SPX) growth of 32.6%. Year-to-date in 2024, VLTO stock surged 31.5%, while the SPX gained 26.5%.
In comparison, VLTO has outstripped the Invesco Water Resources ETF’s (PHO) 28.2% increase over the last year, as well as its 17.9% rise year-to-date.
However, despite announcing better-than-expected adjusted Q3 earnings of $0.89 on October 24, shares declined by 4.6% the following day. This drop resulted from cautious investor sentiment linked to the company’s revised full-year sales growth forecast, now projected in the low single digits. The company’s Q4 guidance showed expectations for non-GAAP core sales growth in the low-to-mid single digits and adjusted earnings per share of $0.86 to $0.90, indicating limited short-term growth. Investor concerns were also raised regarding the sustainability of strong industrial water treatment demand, especially amid a mixed recovery in consumer-packaged goods markets.
For the fiscal year ending in December, analysts anticipate VLTO’s EPS to grow by 9.1%, reaching $3.48. The company’s track record of beating consensus estimates over the last four quarters adds a promising outlook for investors.
Currently, among the 13 analysts following the stock, the consensus rating is a “Moderate Buy,” which includes six “Strong Buy” ratings and seven “Holds.”
On October 25, RBC Capital raised its price target for Veralto to $111 and maintained a “Sector Perform” rating. This upgrade followed the announcement of solid Q3 earnings, featuring 4.5% organic growth and a remarkable 98% free cash flow conversion rate.
As of writing, VLTO is trading below the average price target of $114.83, with a street-high target of $125 suggesting a potential upside of 15.5% from current levels.
On the date of publication, Sohini Mondal did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data herein are for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
The views expressed in this article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
