Citi has issued a research report assigning a target price of HK$168 and a "Buy" rating to Techtronic Industries (00669).
Company management attended a conference organized by the bank and reaffirmed their revenue growth expectations for fiscal years 2026-2027, noting that these expectations have not been adjusted despite Federal Reserve rate hikes.
The bank expects the company's revenue growth to accelerate from approximately 7% in fiscal year 2026 to approximately 9% in fiscal year 2027.
Citi pointed out that following the divestiture of the HART power tools business last year, the consumer segment will continue to scale down this year, which could drive operating margin expansion and potentially offer upside relative to market consensus.
Meanwhile, the AI data center (AIDC) business could also push revenue growth beyond market consensus.
On the cash flow front, at least US$1.3 billion in free cash flow this year will support continued dividend growth and underpin US$500 million in share buybacks through the end of 2027.
The stock has pulled back approximately 15% over the past six weeks, which Citi views as a good buying opportunity.
Management reaffirmed its fiscal year 2027 guidance breakdown, with revenue for its owned brand Milwaukee expected to grow 10%-12%, Ryobi brand revenue growth in the low-to-mid single-digit range, and other consumer goods business revenue flat or slightly declining.