William Blair analyst Tim Mulrooney has maintained their neutral stance on ABM stock, giving a Hold rating on May 29.
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Tim Mulrooney has given his Hold rating due to a combination of factors influencing ABM Industries’ current financial and operational landscape. The company reported a revenue increase that surpassed expectations, driven by growth in its business and industry (B&I) and manufacturing and distribution (M&D) groups. However, despite this positive performance, the outlook for fiscal 2025 suggests that adjusted EPS might slightly miss consensus estimates, and there are concerns about the consistency of growth across quarters.
A significant factor contributing to the Hold rating is the timing risk associated with free cash flow recovery. The company’s working capital is tied up in receivables due to an ongoing ERP implementation, which is expected to be resolved in the latter part of the year. This situation poses a risk to the full-year EPS, potentially placing it at the lower end of guidance. While ABM Industries has a track record of meeting its targets, the current ERP-related disruptions and the focus on maintaining client experience during this transition period justify a cautious approach. Longer-term prospects appear more promising, with anticipated positive organic growth in key areas, but for now, a Hold rating is deemed appropriate.
Mulrooney covers the Industrials sector, focusing on stocks such as WillScot Mobile Mini Holdings, APi Group, and Tetra Tech. According to TipRanks, Mulrooney has an average return of 11.3% and a 64.41% success rate on recommended stocks.
In another report released on May 29, Truist Financial also maintained a Hold rating on the stock with a $55.00 price target.