Fortive Corporation (FTV) is known for its  innovations in the fast-moving fields of software development, robotics, transportation, energy, and healthcare. The stock has more than doubled since hitting its all-time low of $31.22 in mid-March last year. Its 29%-plus gain over the past year can be attributed primarily to its business resiliency, diverse portfolio of products and services, and numerous strategic acquisitions.

Based on the ongoing mass coronavirus vaccination program, recent fiscal stimulus spending, and a prolonged low interest-rate environment, investors are hopeful that a steady and fast recovery of the economy is in the offing.  Such a recovery should drive demand for FTV’s products and services.

Here are factors that we think could influence FTV’s performance in the upcoming months:

Economic Recovery to Drive Demand

The U.S. economy is  in a fast-track recovery mode. U.S. manufacturing activity jumped to a three-year high in February. Also, the recently passed $1.9 trillion American Rescue Plan Act is expected to boost consumer spending and economic activities. Consequently,  the demand for FTV’s products and services, which include preconstruction planning and construction procurement solutions, is expected to increase in the coming months.

The company is also well-positioned to gain from  increasing demand for products to clean medical devices. The global medical device cleaning market is expected to grow at a CAGR of 10.2% from 2021 to 2028. FTV’s Advanced Sterilization Products (ASP) received EUA from the U.S. FDA in April 2020 for the use of STERRAD Systems to decontaminate compatible N95 respirators.

Revenue Growth Across All Segments

FTV’s total sales surged 4.9% year-over-year to $1.32 billion for the fourth quarter, ended December 31. Its sales from the Intelligent Operating Solutions segment, which accounted for more than 41% of its total sales for the quarter, increased 3.2% year-over-year to $544.90 million. Also,  while its sales in the Precision Technologies segment increased 2.3% year-over-year for the fourth quarter, its sales in the Advanced Healthcare Solutions segment increased 12% year-over-year. Its  non-GAAP EPS came in at $0.70 for the quarter, up 18.6% year-over-year.

Favorable Analyst Sentiment

FTV has an average broker rating of 1.71, which indicates favorable analyst sentiment. Of 15 Wall Street analysts that have rated the stock, three rated it a Strong Buy and five rated it a Buy. Also, Wall Street analysts expect the stock to hit $76.53 in the near term, which indicates a potential 12.6% upside.

POWR Ratings Show Promise

FTV has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. FTV has a B grade for Quality also. This is consistent with its trailing-12-month gross profit margin of 56.5%, which is much higher than the industry average  28.5%. Its 16.9% trailing-12-month return on common equity and 10.1% trailing-12-month return on total assets are also significantly higher than  respective industry averages.

Click here to see the additional POWR Ratings for FTV (Stability, Sentiment, Growth, Value and Momentum).

FTV is ranked #38 of 90 stocks in the B-rated Industrial – Equipment industry.

Click here to access several other top-rated stocks in the same industry.

Bottom Line

Even though FTV has been operating for just six years, it has found a market niche  in which it has solidified  its market position  with the help of several strategic acquisitions over the past few years. It is expected to thrive in the coming months as more advanced technologies come to the fore. So, we think betting on the stock could be rewarding.

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FTV shares were trading at $66.84 per share on Wednesday morning, down $0.05 (-0.07%). Year-to-date, FTV has declined -5.52%, versus a 5.35% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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