Ametek downgraded to Peer Perform at Wolfe Research

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Ametek (NYSE:AME) on Thursday was downgraded to Peer Perform from a prior investment rating of Outperform by analysts at Wolfe Research. They said shares in the maker of electronic instruments have become expensive compared with the peer group.

"This is purely a valuation call. We are not harboring any pent-up concerns that emerged during the quarter, and the basic thesis is intact," Nigel Coe, analyst at Wolfe, said in a research note. "However, we have become concerned about extended valuation multiples across the sector."

Ametek (AME) is currently trading at a multiple of about 24 times Wolfe's estimate for EPS in 2023, or an approximately 20% premium to its peer group.

"This premium is generally consistent with history, and we are comfortable in saying that this premium is warranted and well-supported," according to Wolfe. "However, we note that defensive, high-quality stocks such as Honeywell (HON), Roper Technologies (ROP) and Fortive (FTV) have materially lagged year-to-date, with their premiums compressing and in some cases vanishing, putting Ametek (AME) at a relatively rich multiple versus its natural peers."

Wolfe's price target for Ametek (AME) is $152 a share in its base-case scenario.

Comments

[Value Investment Club]

Expensive for sure. Low growth and they can only cut so much cost and fire so many employees. At some point, they actually need people to work at their companies. Here's an idea, reduce the top heavy management.