Knowles’ Strategic Transition and Growth Prospects Drive Buy Rating

Robert W. Baird analyst Tristan Gerra maintained a Buy rating on Knowles (KN – Research Report) today and set a price target of $22.00.

Tristan Gerra has given his Buy rating due to a combination of factors that highlight Knowles’ promising growth prospects and strategic positioning. The company has successfully transitioned into an industrial technology entity, focusing on four key markets that are poised for growth: Medtech, defense and aerospace, industrial, and electrification/energy. These sectors are driven by secular trends such as an aging population, defense priorities, manufacturing automation, and energy needs.
Knowles’ management has set ambitious financial targets, expecting revenue to grow organically by 4-6% and inorganically by 4%, resulting in a combined 8-10% CAGR. The company’s adjusted EBITDA is projected to increase at a 10-14% CAGR, with a significant margin expansion. Additionally, the expected cash flow from operations is set to be 16-20% of revenue, supporting an anticipated EPS growth of over 10%. These robust financial projections and strategic market focus underpin Gerra’s positive outlook on Knowles’ stock.

Based on the recent corporate insider activity of 55 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of KN in relation to earlier this year.