On Wednesday, Stifel analysts increased the price target for Lindsay Corporation (NYSE:LNN) shares from $126.00 to $130.00, maintaining a Hold rating on the stock. According to InvestingPro analysis, the company appears undervalued at its current price of $119.51, with strong financial health metrics supporting its growth potential.
The adjustment reflects the company's solid earnings per share (EPS) performance in the first quarter of fiscal year 2025 (F1Q25), driven by a substantial irrigation project in Egypt and robust operating margins in the Infrastructure segment, despite a 7.2% year-over-year revenue decline.
Lindsay Corporation reported a strong EPS beat in F1Q25, with diluted EPS reaching $6.22 over the last twelve months. The success is supported by the ongoing large irrigation project in Egypt and impressive financial metrics, including a healthy 31.2% gross profit margin and 14% return on equity. This project, along with effective cost management, has helped the company maintain high operating margins within its Infrastructure division.
InvestingPro data reveals several additional strengths, including 22 consecutive years of dividend raises and strong cash flow coverage of interest payments. Stifel analysts note that these factors have been crucial in offsetting softer market conditions in developed regions where irrigation product demand has been weaker.
Looking ahead, Lindsay Corporation anticipates the delivery of a significant $20 million Road Zipper project in the second quarter of fiscal year 2025 (F2Q25). This project is expected to contribute strong incremental margins to the company's financials, building on its current market capitalization of $1.3 billion. The analysts highlight that the delivery of this project will be a key event for Lindsay in the near term, with InvestingPro subscribers having access to detailed financial forecasts and comprehensive analysis through the Pro Research Report.
The company is also poised to benefit from additional international irrigation and infrastructure projects that may emerge over the course of the year. These projects are seen as potential catalysts that could help mitigate the impact of the sluggish developed irrigation market on the company's overall performance.
In summary, Stifel's updated price target for Lindsay Corporation reflects the company's ability to navigate market challenges with its project-driven strategy. The firm's analysts underscore the importance of the Egyptian irrigation project and the upcoming Road Zipper project in maintaining the company's financial stability and growth prospects.
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