First Read Gates Corporation Raising the FY outlook

研报英文原文证据摘录

First Read Gates Corporation Raising the FY outlook

Forecast returns

Forecast price appreciation 28.0%

Forecast dividend yield 0.0%

Forecast stock return 28.0%

Market return assumption 9.2%

Forecast excess return 18.8%

Company Description

Gates Corporation is a global manufacturer of Power Transmission and Fluid Power

equipment products, components, and solutions. The company has a broad portfolio of

products that it sells mostly to replacement channel customers, as well as original equipment

manufacturers (OEMs) across numerous end markets, including automotive, construction,

agriculture, energy, transportation, general industrial, and others. Broadly, the macro trends

that drive top-line growth for Gates include demographics, urbanization, infrastructure build,

and industrial automation. The company generated 2022 revenue of ~$3.5bn.

Valuation Method and Risk Statement

Valuation: We base our price target on relative EV/adj-EBITDA methodology.

Risks: The Electrical Equipment and Multi Industry sector faces a broad range of risks. It is

cyclical in nature with exposure to the underlying cycles inherent in everything from aviation,

auto, trucking and trains to construction and consumer electronics to mining, power, oil and

gas and more depending on the specific stock. EEMI companies are subject to risks associated

with unexpected changes in the underlying global macro environment, currency and interest

rate movements, commodity price inflation as well as company specific execution, M&A,

integration, and changes in the competitive or regulatory environment. These changes can be

in the form of product technology (e.g., solar, energy storage, electric vehicles), ecommerce

and other digital disruption and/or channel disintermediation. Capacity and related pricing