Thoughts on Badger Meter Following Q3 Results
Badger Meter, Inc. (NYSE:BMI) reported its Q3 results last week, which were mostly in line with the Street estimates, despite investor concerns over the impact of industry supply chain challenges on margins.
The Water Utility segment faced very tough year-over-year comps and supply challenges, although organic sales still grew around 2%. Strong orders also continued into Q3, and the company exited the quarter with another record backlog. The company’s manufacturing output continues to be limited by supplier shortages of certain electronics, while logistics remain a challenge. While the company managed to offset these pressures with pricing actions and a more favorable mix of products, cost pressures are expected to linger well into 2022.
| Symbol | Price | %chg |
|---|---|---|
| 006405.KS | 241000 | 0 |
| 006400.KS | 429000 | 0 |
| 6861.T | 70160 | 0 |
| 009155.KS | 73900 | 0 |
Berenberg Bank Lifts Badger Meter Price Target to $105 from $95 following Investor Meeting
Analysts at Berenberg Bank increased their price target on Badger Meter, Inc. (NYSE:BMI) to $105 from $95 following their hosted investor meeting last week, from which they walked away more optimistic about the secular tailwinds driving growth in the water infrastructure industry over the next few years. The analysts believe a perfect storm is emerging as water companies are poised to benefit from infrastructure stimulus and more stringent compliance that specifically targets water, corporate ESG initiatives strongly influencing customer spending behavior, and accelerating adoption of smart water and digital IoT solutions, prompted by the COVID-19 pandemic.
According to the brokerage the company is an underappreciated promising SaaS story as the company aspires to grow its SaaS portfolio to around 10% of sales (from 5% today) over the medium term.
With an appetite for digital solutions increasing, the analysts believe the company can grow organic sales at approximately 6% per year.
