small fuse (NASDAQ:LFUS) shares rose on Friday after analysts at Baird upgraded the electronics and fuse maker's stock to an “Outperform” investment rating.
A price target of $300 was set for the Chicago, Illinois-based company, up from $270 previously. Baird said that the PT Valuation is based on 25x 2025E EPS, a ~20% premium to the S&P's recent ~20x forward multiple plus 1x turnaround for unannounced M&A, which is consistent with the 20% premium seen amid the normalization of fundamentals after the 2012 electronic cycle.
“Having outlined our desire to improve the stock in mid-March and tilted even more positively after 1Q24, a step function rally on our passive component tracker in April now gives us greater conviction that a preliminary turnaround is coming. in electronics. Accordingly, estimates “are also likely to have bottomed, suggesting strong NTM outperformance (~25% is typical after the bottom of the electronics cycle), and transportation improvement is even further additive. Beyond inflecting cyclicality, LFUS also offers attractive secular growth, providing additional outperformance potential,” Baird analysts wrote in a research report.
They also added that, in the short term, electronics expectations for 2Q24 are reasonable (or even beatable), citing the industry's rapid improvement in April.
LFUS +2.50% at $255.69 at 11:58 a.m. on the Nasdaq, shares down 4.7% THE LAST YEAR.