Applied Industrial Technologies: Baird raises PT to $300 from $265, maintains Outperform.

Applied Industrial Technologies: Baird raises PT to $300 from $265, maintains Outperform.

Applied Industrial Technologies (AIT) has seen a significant update in its investment outlook, as Baird Financial has raised its price target for the stock to $300 from the previous $265, while maintaining its "Outperform" rating. This move comes following the company's strong fourth-quarter earnings report, which exceeded market expectations.

AIT reported an earnings per share (EPS) of $2.80, surpassing the forecasted $2.63, marking a 6.46% surprise. The company's revenue also exceeded projections, reaching $1.22 billion compared to the anticipated $1.18 billion, representing a 3.39% surprise. Despite these positive results, AIT's stock experienced a pre-market decline of 3.89%, trading at $265. This decline may reflect broader market trends or specific company challenges, as the stock remains within its 52-week range of $189.18 to $282.98 [1].

The company's financial highlights for the quarter include:
- Revenue: $1.22 billion, up from $1.18 billion forecasted.
- Earnings per share: $2.80, above the $2.63 forecast.
- Free cash flow: $465.2 million, a 34% increase year-over-year.
- Gross margins: Expanded to over 30%.

For fiscal 2026, AIT anticipates EPS between $10.00 and $10.75, with total sales expected to rise by 4-7%. The company forecasts organic sales growth of 1-4% and anticipates a pricing contribution of 150-200 basis points. AIT expects stronger performance in the second half of the year, supported by bonus depreciation incentives [1].

Neil Scrimcher, CEO of AIT, stated, "We believe a productive demand environment should develop as policy clarity continues to emerge." He emphasized the company’s ability to navigate various macroeconomic scenarios and its focus on accelerating growth [1].

Baird's analyst, who covers AIT, cited the company's strategic acquisitions and innovation in data centers and semiconductor manufacturing as key drivers of growth. The analyst also noted the company's strong financial health, supported by excellent profitability and momentum metrics, with an overall score of 3.29 (rated "GREAT") from InvestingPro [1].

Despite the positive earnings report, AIT's stock fell 3.89% in pre-market trading, suggesting that investors may be cautious about broader market trends or specific company challenges. However, the stock remains within its 52-week range and is trading above its Fair Value, with a P/E ratio of 27.58x relative to near-term earnings growth [1].

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-applied-industrial-technologies-beats-q4-2025-expectations-93CH-4192936