BWX Technologies Downgraded to Hold from Buy at Deutsche Bank with $150 Price Target

BWX Technologies was downgraded to Hold from Buy by Deutsche Bank with a price target of $150, up from $119. The firm's new estimate attempts to capture long-term value from new commercial nuclear builds, but Deutsche Bank is not confident in the company's current multiple of 50-times free cash flow on 2025 estimates.

Title: Deutsche Bank Downgrades BWX Technologies to Hold

Deutsche Bank has downgraded BWX Technologies, Inc. (NYSE:BWXT) to Hold from Buy, with a new price target of $150, up from $119. The firm's revised valuation framework now explicitly accounts for the long-term potential of commercial nuclear, particularly greenfield small modular reactors (SMRs) and CANDU deployments. Despite optimistic assumptions, Deutsche Bank believes that BWXT's current multiple of 50 times 2025 free cash flow leaves little room for upside, leading to the downgrade [3].

The new estimate by Deutsche Bank reflects a shift in the market's perception of BWXT's growth prospects. The firm's preference is now directed towards names with clearer earnings momentum, manageable risks, and more compelling valuations. While BWXT may continue to attract flows due to its limited nuclear exposure across public markets, Deutsche Bank prefers other opportunities in the sector [3].

BWXT Technologies is a specialty manufacturer and service provider in the nuclear sector, producing nuclear components, fuels, and reactors for both government and commercial clients. The company recently signed a contract with HIGHVOLT to purchase additional mobile resonant test systems, expanding Kinectrics’ high-voltage cable testing capacity in the field. This strategic move is in response to the anticipated growth in the HV cables market, which is expected to quadruple due to the increase in renewable energy construction projects [2].

The stock has shown some positive signals in recent technical analysis, with a positive evaluation from Intellectia AI, which identified BWXT as a Strong Buy candidate. However, Deutsche Bank's downgrade suggests that the market may be more cautious about the company's valuation and long-term growth prospects [4].

As the second-quarter earnings season approaches, Deutsche Bank expects mixed results across large-cap defense, with multiple companies facing guidance risks. BWXT is forecasted to raise the low end of its full-year EPS guidance, but the stock's current multiple of 50 times 2025 free cash flow may not justify the price [3].

References
[1] https://www.marketbeat.com/stocks/NYSE/BWXT/
[2] https://finance.yahoo.com/news/bwx-technologies-bwxt-subsidiary-kinectrics-164426877.html
[3] https://seekingalpha.com/news/4465965-general-dynamics-upgraded-northrop-and-bwx-downgraded-at-deutsche-bank
[4] https://intellectia.ai/stock/BWXT/forecast