Fortive's Spin-Off May Unlock Value, Analyst Says

Analyst Piyush Avasthy from Citi has initiated coverage on Ralliant (RAL) with a Neutral rating and a $53 price target. Ralliant's separation from Fortive (FTV) may unlock value, but growth could be constrained by involvement in cyclical industries and economic uncertainties. The average one-year price target for Fortive is $63.19, with an upside of 25.05% from the current price of $50.53. The estimated GF Value for Fortive in one year is $39.88, suggesting a downside of 21.08% from the current price.

Analyst Piyush Avasthy from Citi has initiated coverage on Ralliant (RAL) with a Neutral rating and a $53 price target. Ralliant's recent separation from Fortive (FTV) may gradually enhance its value, according to Avasthy. However, the analyst points out that the company's potential growth might be constrained by its involvement in cyclical industries and prevailing economic uncertainties [1].

The average one-year price target for Fortive is $63.19, with an upside of 25.05% from the current price of $50.53. The estimated GF Value for Fortive in one year is $39.88, suggesting a downside of 21.08% from the current price [1].

Fortive Corp (FTV) delivered a solid first quarter performance with adjusted earnings per share of $0.85, in line with expectations. The company expanded both adjusted gross and operating margins despite slightly lower-than-expected revenues. Fortive Corp (FTV) demonstrated strong cash flow generation and continued share repurchases, reflecting a commitment to value-enhancing capital deployment. The Intelligent Operating Solutions and Advanced Healthcare Solutions segments showed sustained top-line momentum. Fortive Corp (FTV) has reduced its exposure to imports from China by 70% since 2018, enhancing supply chain and manufacturing resilience [1].

However, core revenue declined by 2% in the quarter, slightly below expectations, with total revenue down 3% due to FX headwinds. Precision Technologies segment experienced an 8.4% core decline, driven by lower-than-expected orders and shipment delays. The company faces challenges from newly announced tariffs, with an estimated gross impact of $190 million to $220 million. Test and Measurement core revenue declined by high teens, with significant declines in Western Europe and China. Adjusted operating profit margins contracted by 260 basis points in the Precision Technologies segment due to lower volumes and unfavorable mix [1].

The separation of Ralliant from Fortive may provide opportunities for both companies to focus on their core competencies and potentially unlock value. However, investors should closely monitor the performance of both companies and the broader economic conditions that could impact their growth prospects.

References:
[1] https://www.gurufocus.com/news/2989451/fortive-ftv-spinoff-may-unlock-value-says-analyst-ftv-stock-news
[2] https://www.marketscreener.com/news/gf-securities-places-2-billion-yuan-tap-issue-ce7c5fdadc8cf125