2023-10-09 10:54:39 ET
B Riley Securities initiated coverage on Kimball Electronics ( NASDAQ: KE ) with a Buy rating and a 12-month price target of $39 per share, and saw continuing growth in KE's electronic manufacturing business, riding the wave of several megatrends.
KE grew its automotive end market by 41% in FY23 to $820M, fueled by a growing business related to electronic power steering, body controls, automated driver assist systems (ADAS), and regenerative braking, said analysts at B Riley.
B Riley noted that KE also operates in robust medical and industrial verticals, and a hallmark of the business is long-term customer relationships.
Kimball Electronic's top-three customers, Nexteer Automotive, Philips, and ZF Friedrichshafen comprised about 41% of FY23 sales.
"We believe KE's already robust industrial vertical could get a charge from the electrification of the grid and onset of EV charging stations at scale," the analysts added.
B Riley believed that the company was also enjoying a "renaissance" under new leadership, including CEO Ric Philip who joined the company in March.
"We see revenue growth moderation, while backlog begins to replenish, accompanied by reductions in working capital and a flip back to positive FCF generation, with continued new wins that would drive re-acceleration in FY25," B Riley said.
KE stock has risen 19.87% since the start of the year and is up 50.41% on a 12-month reading.
More on Kimball Electronics
- Kimball Electronics: Consistently Topping Record Quarterly Sales
- Kimball Electronics: Growth Is Strong And Likely To Continue
- Seeking Alpha’s Quant Rating on Kimball Electronics
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B Riley Securities initiates coverage on Kimball Electronics with Buy rating, sees growth on macros