IMI Looks Undervalued With Long-Term Automation Growth And Margin Improvement Drivers

2025-01-28 01:37:22 ET

Summary

• IMI plc is poised for improved growth in 2025, driven by recoveries in industrial automation markets, still-healthy process automation demand, and some improvement in life sciences and transport markets.
• Final 2024 results may be lackluster, and real evidence of recovering industrial demand may not emerge until mid-2025, but margin leverage has remained positive even on slower sales.
• I expect long-term revenue growth of 5% for IMIAF, with significant potential in power infrastructure, automation, and energy-efficient solutions, as well as further margin leverage.
• IMI looks undervalued by 10-20%, making them an interesting idea ahead of anticipated end-market recoveries in 2025.

I wouldn't say that global capital goods manufacturers are completely out of the woods yet with respect to weak trends in many geographies, but I think the edge of the forest is at least in sight. Manufacturing PMIs remain softer than I'd like in North America and Europe, but I'm expecting improvement around midyear, and I'm a long-term believe in automation adoption across a range of industries in response to aging workforces and labor costs, as well as ongoing adoption of more energy-efficient technologies....

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