Ingersoll Rand Gains On 4Q Earnings Beat; Street Sees 23% Upside

Ingersoll Rand, formerly known as Gardner Denver Holdings, reported stronger-than-expected 4Q results. Shares of the technology-driven industrial solution provider rose 3.8% in Monday’s extended trading session.

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Ingersoll Rand’s (IR) adjusted earnings jumped 20.5% to $0.53 per share in 4Q and surpassed the consensus estimate of $0.45. The company reported 4Q sales of $1.5 billion, beating the Street’s estimates of $1.46 billion.

Its top-line result registered a whopping 149% year-over-year growth, reflecting benefits from the acquisition of Ingersoll-Rand PLC’s Industrial segment. Notably, Gardner Denver Holdings completed the acquisition of Ingersoll-Rand PLC’s Industrial segment on Feb. 29, 2020, and renamed the combined company Ingersoll Rand Inc.

Additionally, the company announced that it completed the acquisition of Tuthill Vacuum and Blower Systems in January. It agreed to sell a majority interest in its High-Pressure Solutions (HPS) business unit to American Industrial Partners for approximately $300 million in cash. (See Ingersoll Rand stock analysis on TipRanks)

For 2021, Ingersoll Rand expects mid-single-digit organic revenue growth across its Precision and Science Technologies (PST), Industrial Technologies and Services (ITS), and Specialty Vehicle Technologies (SVT) segments. The acquisition of Tuthill Vacuum and Blower Systems is forecasted to generate approximately $60 million in revenue to the ITS division.

Ahead of the earnings release, UBS analyst Markus Mittermaier reiterated his Buy rating and a price target of $58 (32% upside potential) on the stock. Mittermaier believes that the sale of a majority interest in the HPS segment would reduce the company’s upstream oil and gas exposure to less than 2% of total revenues. The analyst noted that the proceeds from the transaction would help Ingersoll Rand to offset near-term growth headwinds from HPS and limit cyclical downturn exposure.

Overall, analysts are bullish about the stock with a Strong Buy consensus rating based on 6 unanimous Buys. The average analyst price target of $53.83 implies almost 23% upside potential to current levels. Shares have gained approximately 13.4% over the past year.