ROP - Roper Technologies rated Buy in new coverage at Jefferies

2023-06-27 08:39:42 ET

Roper Technologies ( NYSE: ROP ) on Tuesday was rated Buy in new research coverage by analysts at financial-services firm Jefferies. They said the industrial software company benefits from having customers that aren’t greatly affected by economic cycles of recession and recovery.

“Roper ( ROP ) deploys a proven playbook of compounding free-cash-flow generation to drive M&A, then improving the organic growth rates of acquired assets and using the free-cash-flow generation to acquire more assets and spin the flywheel,” Brent Thill, analyst at Jefferies, said in a June 27 report. “Ropers’ ( ROP ) portfolio can continue to grow mid-single-digit-plus organically through the next several years, with acquisitions propelling Roper ( ROP ) to double-digit revenue growth.”

Roper ( ROP ) in the past few years has undertaken a strategy to buy specialty-software businesses while selling off subsidiaries that manufacture equipment. Acquisitions include Frontline Education, a maker of school administration software, and Vertafore, which makes software for the insurance industry. Roper ( ROP ) this year sold its interest in Compression Controls, a maker of equipment for the oil and gas industries, to Honeywell International ( HON ).

Jefferies set a price target of $530 a share for Roper ( ROP ), based on a multiple of 23.5 times adjusted EBITDA for full-year 2024.

“A reset in private market valuations will provide a positive catalyst to Roper ( ROP ) as they look to deploy $3 billion to $4 billion of capital in 2023,” according to Jefferies. “Roper ( ROP ) is equipped with about $1.2 billion of cash and $3.5 billion of an undrawn credit facility, providing them with $4 billion-plus of capital to deploy.”

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