Fortive Corporation (NYSE: FTV) Stock Downgraded by Wolfe Research as Spinoff Plans Unfold
Wolfe Research has downgraded Fortive Corporation's stock rating from "Outperform" to "Peer Perform" following the company's announcement to spin off its Productivity Technologies (PT) segment. This move aims to streamline operations by consolidating certain businesses while separating the more cyclical PT portfolio.
The PT segment is expected to generate $2.3 billion in sales this year with an EBITDA of $612 million, representing a 27.2% margin. Despite modest core growth, the segment has seen a notable cumulative operating margin expansion. The strategic spinoff is set to be completed in the fourth quarter of 2025.
Fortive's decision to restructure highlights a trend among companies to focus on areas with more stable revenue streams. The company's stock performance will likely reflect the market's reaction to this organizational change.
In addition to the PT segment spinoff, Fortive plans to spin off its Precision Technologies segment into a new public company, NewCo, by the end of 2025. These moves are part of the company's efforts to enhance core growth and streamline its business portfolio.
Despite the downgrade by Wolfe Research, InvestingPro data shows Fortive's strong financial health with an impressive gross profit margin and operational efficiency. Analysts predict profitability for the company, but caution is advised due to the high P/E ratio and revised earnings forecasts.
For investors interested in Fortive's financials and future prospects, additional insights are available on InvestingPro. Stay informed about Fortive's valuation and performance metrics as the company navigates these strategic changes.
In summary, Fortive's stock downgrade and spinoff plans reflect the company's efforts to focus on areas of growth and stability. Investors should monitor the company's progress and consider the potential impact on their investment decisions.