UBS Raises Price Target on Roper Industries (ROP) Following 3Q Report
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UBS reiterated a Buy rating on Roper Industries (NYSE: ROP), and raised the price target to $195.00 (from $190.00), following the company's 3Q earnings report. ROP reported EPS of $1.65, above the consensus of $1.61, and company guidance of $1.59-1.63. 2016 EPS guidance lowered to $6.46-$6.60 (from $6.57-$6.71) on full year revenue growth of 5-6%. Roper also announced its $632M acquisition of ConstructConnect, a SaaS provider for the commercial construction industry with expected 2017 revenue of $150M and mid-30s EBITDA margins.
Analyst Shannon O'Callaghan commented, "Roper 3Q16 adjusted EPS of $1.65 was above our $1.61 estimate, consensus of $1.61, and company guidance of $1.59-1.63. Relative to our estimates the segments produced a $0.03 beat led by Medical (+$0.02) and RF Tech (+$0.01), while Industrial and Energy were in line. Organic sales grew 1.6% vs. our flat estimate with RF Tech 7.4% (vs. our 3%) and Industrial 0.3% (vs. our -1%) better and Medical 4.5% (vs. our +5%) and Energy -12.6% (vs our -13%) closely in line. Oil & Gas remained weak but Roper did see modest sequential improvement within Energy as well in the pumps business. In Medical segment, the timing of orders converting to deliveries in imaging and medical products led to the shortfall vs prior HSD growth expectations, but Roper still sees a MSD 2016 exit rate. Orders declined 1% organically (+4% reported) in 3Q and book-to-bill stood at 0.98x, with Roper noting that had Transcore's MTA order hit in 3Q book-to-bill would have been 1.05x. Free cash flow of $308M brings YTD FCF to $731M, up 11% y/y and 146% of net income."
Shares of Roper Industries closed at $169.47 yesterday.
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