Oppenheimer Upgrades Itron (ITRI) to Outperform, 'reasonable valuation, likely upside to FY24 consensus'

Oppenheimer analyst Noah Kaye upgraded Itron (NASDAQ: ITRI) from Perform to Outperform with a price target of $81.00.

The analyst comments "ITRI reported multiple strong quarters on improving backlog conversion and favorable mix during 2023. With component lead times improving for passives and little changed for power and analog, we expect a similar start to 2024. We view the company’s upcoming investor day as a potential catalyst for shares, with focus on medium-term growth expectations for the Outcomes segment. The $2B bookings guide for FY23 implies just under $700M in 4Q, which aligns with historical seasonality and in our view should be achievable; sentiment will likely respond more to FY24 booking outlook commentary. Consensus for FY24 envisions significant deceleration in EBITDA margin improvement (50bps, vs. 450bps estimated for FY23) on 6% revenue growth. While we understand Street margin expansion outlook may reflect mix dynamics, we believe ITRI is capable of driving stronger operating leverage than consensus assumes; our $3.51 adj. EPS estimate is above the Street’s $3.13. Valuation sits below 5-year averages (22.5x P/E vs. average 26.8x, 14.7x EV/EBITDA vs. average 15.9x), though slightly above longer-term averages. Upgrading to Outperform, $81 PT. In view of reasonable valuation, likely upside to FY24 consensus, and Investor Day potential catalysts, we upgrade the shares to Outperform with an $81 PT, based on 23x our FY24 adj. EPS estimate of $3.51 (unchanged)."

For an analyst ratings summary and ratings history on Itron click here. For more ratings news on Itron click here.

Shares of Itron closed at $70.96 yesterday.

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