Fortive's (FTV) pending split is strategic, as the post-split Fortive could gain stability with more predictable earnings, while the newly established Ralliant may benefit from greater independence and exposure to high-growth sectors, RBC Capital Markets said in a note Sunday.
The company will host a two-part Investor Day in New York on June 10 to showcase Ralliant in the morning and the new Fortive in the afternoon.
Each entity will present with a new CEO for the first time, with the new Fortive expected to focus on its recurring revenue strength and core sectors, while Ralliant will outline financial targets as a standalone sensors and test company, RBC saidf.
Both companies will set more conservative, achievable financial goals following the past underperformance of Fortive's long-term targets, RBC analysts noted.
Fortive has raised its share repurchase authorization to 20 million shares and launched a $550 million special buyback plan tied to proceeds from the Ralliant spin-off, which may lift 2025 EPS by about 1.5%, according to RBC.
The Investor Day could help sentiment, as Fortive stock has lagged peers since its Q1 earnings, RBC said.
RBC maintained a sector perform rating for Fortive and raised its price target to $79 from $78.
Price: 73.43, Change: +0.41, Percent Change: +0.55
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