ESAB initiated with a Neutral at BofA

BofA analyst Sherif El-Sabbahy initiated coverage of ESAB with a Neutral rating and $63 price target. While ESAB’s organic growth profile is still tied to PMIs/industrial cycle, it is taking steps to diversify its revenue base into less cyclical, high margin businesses such as specialty gas, the analyst tells investors in a research note. ESAB’s product refresh should help drive North America equipment share, but BofA says an unsteady macro backdrop, leverage, outperformance year-to-date, and sensitivity to IP keeps the risk/reward balanced in the near-term.