Vontier Corporation had a knockout year in 2023, with a 79% surge in its share price outpacing the S&P 500’s 24% gain.
Analysts at Bank of America (BofA) Securities believe the company specializing in mobility technologies and alternative energy solutions has more room to run in 2024, with recent acquisitions aiding growth in its payments offerings.
They’ve upgraded the stock to ‘Buy’ from ‘Neutral’ with a $40 price target, up from $37. The company's shares were 0.8% down at $34.82 in early Friday afternoon trade.
“We think investors' perception on Vontier is anchored on US fuel dispensers, but these are just ~10% of revenue,” the analysts wrote in a note to clients.
“The Mobility Technologies segment (32% of revenue) offers exposure to cloud payments software (Invenco), cloud fleet monitoring solutions (Teletrac Navman), alternative fuels (ANGI), and EV charging software (Driivz).”
The analysts noted that Vontier has a roughly 40% market share in retail fuel dispensers, but only a market share of around 10% in gas station payments/software.
In 2023, Invenco’s iNFX platform announced contract wins covering 20,000 gas stations, or about 19% of US gas stations.
The contract wins for the iNFX payments platform would add to multi-year visibility, the analysts wrote.
“As US fuel dispenser headwinds fade, we forecast all-in organic revenue growth and margin expansion in 2024E,” they added.
“We forecast net debt to EBITDA of 2.8x at YE23, alleviating leverage concerns.”
The BofA analysts have forecast a 4% compound annual growth rate (CAGR) and 170 basis points of cumulative adjusted operating margin expansion will drive a 10% adjusted earnings per share CAGR up to 2026.
They expect the company to report 2014 adjusted EPS of $3.14, above consensus of $3.09, rising to $3.51 in 2025.
Their 2024 estimates exclude the recently divested Coats business to Victor Capital Partners.