Modine Manufacturing (MOD) PT Raised to $125 at B.Riley

B.Riley analyst Jeff Van Sinderen raised the price target on Modine Manufacturing (NYSE: MOD) to $125.00 (from $98.00) while maintaining a Buy rating.

The analyst commented: "Buy-rated Modine Manufacturing Company reported 4Q results AMC 5/21 with GM/AEBITDA above, and revenue marginally below expectations, as 80/20 implementation continued delivering strong results and its ninth consecutive Q of Y/Y AEBITDA margin improvement. Climate solutions (CS) revenue increased 0.6% (down 4% organically) vs. our/consensus estimates of (3.0%)/0.6%. Performance technologies (PT) revenue decreased 5.4% (up 2% organically) vs. our/consensus estimates of (6.4%)/(4.0%). Strong growth in data centers, including impact from the Scott Springfield Manufacturing acquisition that closed on 3/1, and improvements from 80/20 initiatives in heat transfer products (HTP) drove CS performance with GM up 270bps to 25.9% and AEBITDA margin up 210bps to 18.0% with AEBITDA up 14% to $47.5M. Data center sales and HVAC&R sales increased 40% and 1%, respectively, driving CS revenue up, mostly offset by HTP sales decreasing 20%. In PT, liquid-cooled applications and air-cooled applications decreased 13% and 2%, respectively, driving PT down, partially offset by advanced solutions increasing 15%. Higher EVantage product sales including commercial and specialty vehicle customers, as well as coatings, off-highway, and gensets, along with divestitures, drove PT performance with GM up 600bps to 20.0% and AEBITDA margin up 430bps to 13.4% with AEBITDA up 38% to $46.1M. Divestiture of three automotive businesses and lower automotive sales drove PT revenue down while revenue increased 2% ex-divestitures, primarily driven by higher off-highway and specialty vehicle sales, partially offset by lower automotive sales. MOD provided FY25 guidance that includes expectations for continued robust growth in datacenters, meaningful improved HVAC&R growth and return to growth for HTP in CS while in PT, expectation for strong growth in advanced solutions continues and 80/20 rationalization continues to impact the remainder of the segment. Implied FY25E AEBITDA margin of ~14.5% compared to a 13.1% FY24 AEBITDA margin, reflects progress in the transformation plan running ahead of schedule as MOD nears the beginning of Phase II. We are lowering/raising our revenue/AEBITDA estimates, raising our PT from $98 to $125 (multiple up one turn, rolling forward one year), and reiterating our Buy rating."

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