Crane NXT: DA Davidson maintains Buy, PT raised to $85 from $82.50.

Crane NXT: DA Davidson maintains Buy, PT raised to $85 from $82.50.

Crane Nxt Co. (CXT) recently held its Q2 earnings call, revealing a strong quarter characterized by significant sales growth and strategic advancements. Despite facing challenges in certain segments, the company demonstrated robust operational execution and maintained a positive outlook for future growth.

Key Highlights:

- Strong Sales Growth: Crane Nxt reported an impressive sales growth of approximately 9% year-over-year in the second quarter, driven by strategic acquisitions and a strong performance in the international currency sector [1].

- Record High Backlog: The international currency business achieved a new milestone with a record high backlog of approximately $400 million in the second quarter, underscoring the growing demand and the company’s strong market position [1].

- Free Cash Flow Conversion: The company demonstrated continued operational discipline with a 120% free cash flow conversion in the quarter, reflecting its efficient management and ability to convert revenue into cash [1].

- Innovative Product Launches: Crane Nxt launched two innovative products: Fortress in the Authentication segment and JetScan Ultra in CPI, expected to enhance the company’s technology leadership and position it for future growth [1].

- Integration of De La Rue Authentication: Significant progress has been made in integrating the De La Rue Authentication acquisition, anticipated to lead to operating profit margins of approximately 20% by 2026 [1].

- M&A Pipeline: With a strong balance sheet, Crane Nxt is well-positioned for additional mergers and acquisitions. The company expressed confidence in announcing another transaction within the next year [1].

- Challenges in CPI Segment: The CPI segment experienced a core sales decline of approximately 1% due to anticipated lower volume and an unfavorable product mix, leading to a decrease in the adjusted operating margin [1].

- Impact of Acquisitions on Margins: The adjusted segment operating profit margin decreased by approximately 350 basis points year-over-year, driven by the expected impact of dilution from recent acquisitions [1].

- Vending Segment Challenges: The vending segment faced headwinds due to China tariffs, expected to lead to some sales challenges in the latter half of the year [1].

- Forward-Looking Guidance: Crane Nxt reaffirmed its full-year guidance, projecting adjusted EPS in the range of $4 to $4.30 and SAT sales growth between 19% and 21%, including contributions from the De La Rue acquisition [1].

Investment Recommendation:

DA Davidson recently maintained its Buy recommendation for Crane Nxt Co. and raised its price target to $85 from $82.50, reflecting the company’s strong performance and growth prospects [1].

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/CXT-N/pressreleases/34095064/crane-nxt-reports-strong-q2-growth-amid-challenges/