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SPX Technologies (NYSE:SPXC) -6.5% in Wednesday's trading as UBS downgraded the stock to Neutral from Buy with a $90 price target, citing expected slower sales growth and valuation.
The stock has been on a tear, strongly outperforming industrial peers and the broader market following a wave of robust quarterly earnings results and beats over the past year, and "priced to perfection" with investor sentiment likely peaking, UBS analyst Damian Karas said.
While SPXC Technologies (SPXC) should see continued healthy demand into 2024, Karas said he expects the rate of sales growth and margin expansion to decelerate from current levels, and balance sheet capacity and upside from capital allocation has "normalized from net cash a year ago to net debt/EBITDA of ~2x” after recent TAMCO and ASPEQ acquisitions.
Upward revisions to the underlying business outlook, which is already rosy, will be required to drive near-term stock upside, Karas concluded.
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