Jefferies raises Veralto stock price target on strong quarter

Jefferies has increased its price target for Veralto Corp. (VLTO) shares to $135 from $115, maintaining a Buy rating on the stock. The new target suggests a potential 19% upside from the current price of $113.78, although InvestingPro data indicates the stock might be overvalued at its present level. Jefferies highlighted Veralto's impressive third-quarter performance, with higher sales and margins, leading to the decision.

The company boasts an impressive gross profit margin of 60%, which underscores its operational efficiency. Jefferies also noted that Veralto's cost reduction program is progressing ahead of schedule, which is expected to support margin expansion in 2027 and 2028. The absence of tariff refunds and Cleanwater1 dilution could slightly dampen headline margin gains in 2027, according to the firm.

Despite this, Jefferies anticipates Veralto's core growth to accelerate in 2027, bolstered by robust third-quarter earnings that surpassed Wall Street's expectations. Adjusted earnings per share (EPS) reached $1.18, surpassing the forecasted $0.95 EPS and marking a 24.2% increase over the projected amount. Revenue for the quarter increased to $1.51 billion, prompting a revision of the company's full-year profit outlook.

These positive earnings results have garnered significant attention from investors and analysts, highlighting Veralto's operational efficiency and market position. The company's decision to lift its profit outlook further underscores its confidence in future performance, reflecting favorably on its financial progress.