Fluidics systems and specialty engineered products manufacturer IDEX Corporation (IEX) recently revealed that it has entered into a definitive agreement to acquire Nexsight, LLC for $120 million. The deal is likely to close in the first quarter of 2021.
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Following the news, shares of the company appreciated marginally to close at $236.37 in Tuesday’s extended trading session.
Implications of the Deal
With this buyout, IDEX will strengthen its iPEK and ADS business units. These units design and create sewer crawlers, inspection and monitoring systems and software applications that allow teams to identify, anticipate and correct wastewater system issues remotely.
Nexsight has annual sales of about $50 million, and post the acquisition, it will become a part of IDEX’s Fluid & Metering Technology segment
Management Commentary
The CEO of IDEX, Eric Ashleman, said, “Acquiring Nexsight will broaden our expertise in the inspection and monitoring of wastewater infrastructure. We intend to continue growing our presence in intelligent water technologies, where we can help predict and identity wastewater system issues early, preventing them from causing property damage, harming the environment and impacting public health.”
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Price Target
Recently, Loop Capital Markets analyst Scott Graham initiated a Hold rating on the stock with a price target of $234, which implies downside potential of 1% from current levels.
According to the analyst, the company’s robust earnings track record and competitive margins give it a strong footing. However, as almost a quarter of its sales is derived from weak markets, it can be a cause of concern in the future.
The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 5 Buys and 3 Holds. The average IDEX price target of $247.86 implies that the stock has upside potential of 4.9% from current levels.
Smart Score
IDEX scores an 8 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to outperform market expectations. Shares have gained 21.5% over the past year.
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