Donaldson: Accretive Facet Filtration Acquisition Strengthens Margins, Aftermarket Exposure, and Supports Buy Rating

Donaldson Company, the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Laurence Alexander from Jefferies maintained a Buy rating on the stock and has a $123.00 price target.

Laurence Alexander has given his Buy rating due to a combination of factors tied to Donaldson’s planned acquisition of Filtration Group’s Facet Filtration business. He views the deal terms as attractive despite the headline multiple, because expected cost synergies meaningfully reduce the effective EBITDA multiple and the target’s margins are substantially higher than Donaldson’s existing average, lifting the overall profitability of the industrial segment. The acquisition also strengthens Donaldson’s position in aviation and power generation, adding a largely aftermarket-driven revenue stream with a high proportion of replacement parts, which typically provides more stable and recurring cash flows.

Alexander also highlights that the transaction is structured conservatively, funded with existing credit lines while keeping leverage below 1.5x EBITDA, preserving balance sheet flexibility for dividends, buybacks, and future bolt-on deals. He judges regulatory risk as manageable, given that the divestiture is required to address antitrust concerns and that defense reviews in the US and Europe are not expected to derail the transaction. The deal is projected to be accretive to EPS within about a year of closing and to provide incremental earnings growth through 2028, supporting a favorable risk‑reward profile even though the projected return on invested capital is somewhat below that of share repurchases. Collectively, these elements underpin his positive stance on the stock and support the Buy recommendation.

Alexander covers the Basic Materials sector, focusing on stocks such as Albemarle, Nutrien, and Linde. According to TipRanks, Alexander has an average return of -0.1% and a 47.77% success rate on recommended stocks.

In another report released today, Robert W. Baird also maintained a Buy rating on the stock with a $110.00 price target.