Veralto Corp. (VLTO): Strong 2Q26 beat drives FY2026 outlook higher; PQI expected to support 2H26 margin expansion; Buy

研报英文原文证据摘录

Veralto Corp. (VLTO): Strong 2Q26 beat drives FY2026 outlook higher; PQI expected to support 2H26 margin expansion; Buy

Goldman Sachs Veralto Corp. (VLTO)

accelerate to ~5%-6% in 2H, supported by continued strength in Water Quality and

improving demand trends within PQI. For FY2026, VLTO raised its core sales growth

outlook to +4.0%-4.5% (from +3.0%-4.5% prior), compared with GSe of 3.8%, while

also increasing its adj. operating profit margin expansion outlook to +25bps to

+50bps (from +25bps). Additionally, the company raised its adj. EPS guidance to

$4.35-$4.43 (from $4.20-$4.28), above GSe/consensus of $4.27/$4.25, reflecting

stronger than expected 2Q26 performance and confidence in continued growth and

margin progression through the second half of the year.

n PQI expected to drive margins in the back half of 2026. Management guided to

~25bps of operating margin expansion in 3Q26 and noted that 4Q26 margin

expansion should exceed 50bps yoy, with PQI expected to be the primary

contributor. The company highlighted improved fixed cost absorption and benefits

from production optimization initiatives within the marking and coding business as

key drivers of the expected margin improvement.

n Capital deployment likely to remain active through the balance of 2026.

Management reiterated that its acquisition pipeline remains active across both

Water Quality and PQI, while remaining opportunistic on share repurchases. We note

that the company has already repurchased ~$46mn of stock in 3Q26, which suggests

management continues to view current valuation levels as attractive. That said, we

believe M&A is likely to remain the primary capital allocation priority, supported by

active acquisition funnels and encouraging performance from recently acquired

assets.