On Thursday, Jefferies began coverage on MSA Safety (NYSE:MSA) shares, issuing a Hold rating and setting a price target of $200. The firm highlighted MSA Safety as a high-quality industrial entity with robust gross margins of 47.91%.
According to InvestingPro data, the company maintains strong financial health with an overall score of "GREAT," and two analysts have recently revised their earnings estimates upward. The company is expected to compound its earnings at a high single-digit rate, with potential upside from strategic capital deployment.
MSA Safety's served markets are considered resilient, benefiting from enduring trends that support the company's long-term forecast of mid-single-digit organic growth through 2028. With current EBITDA at $477.63 million, MSA has demonstrated a significant improvement in adjusted EBITDA margins, increasing approximately 950 basis points from 2014 to 2023.
InvestingPro subscribers can access detailed financial health metrics and 10+ additional ProTips that provide deeper insights into MSA's performance. Jefferies notes further opportunities for margin expansion, with management aiming for an annual increase of 30-50 basis points.
The company's conservative balance sheet, with a healthy current ratio of 2.68, and strong free cash flow conversion are emphasized as enabling factors in its acquisition strategy. This approach could potentially add a 13% upside to Jefferies' 2027 earnings estimate for MSA Safety.
The company has also maintained dividend payments for 52 consecutive years, demonstrating consistent shareholder returns. Despite the positive long-term outlook, the analyst expressed caution regarding potential near-term challenges.
Specifically, the firm anticipates a headwind in 2025 due to the anniversary of MSA's Air Force contract, which could pose a $40 million challenge. Jefferies suggests that it might adopt a more positive stance on the stock once the company overcomes the comparative headwind from this contract. For comprehensive analysis including valuation metrics and growth projections, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, MSA Safety Inc. has secured a $33 million contract to supply the U.S. Coast Guard with advanced firefighter breathing apparatus over the next decade. The initial orders, valued at around $22 million, have already been placed. Production is currently underway at MSA Safety's Murrysville, Pennsylvania facility.
In financial updates, MSA Safety reported a slight 3% decrease in Q3 net sales to $433 million, balanced by a 3% increase in adjusted earnings per share to $1.83. The company has also announced Q4 dividends for both common and preferred stock, with shareholders set to receive $0.51 per share on common stock and $0.5625 per share on preferred stock.
B.Riley Financial initiated coverage of MSA Safety stock and assigned a Buy rating, emphasizing the company's strong market presence and innovative approach. These are some of the recent developments that investors should be aware of.
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