5 Insightful Analyst Questions From Fortive's Q1 Earnings Call
Is now the time to buy FTV? Find out in our full research report (it's free).
Revenue: $1.47 billion vs analyst estimates of $1.5 billion (3.3% year-on-year decline, 1.4% miss)
Adjusted EPS: $0.85 vs analyst estimates of $0.85 (in line)
Adjusted EBITDA: $396 million vs analyst estimates of $398.1 million (26.9% margin, 0.5% miss)
Management lowered its full-year Adjusted EPS guidance to $3.90 at the midpoint, a 3.9% decrease
Operating Margin: 15.8%, down from 19.8% in the same quarter last year
Organic Revenue rose 2.2% year on year, in line with the same quarter last year
Market Capitalization: $23.82 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Scott Davis (Melius Research) pressed CEO Jim Lico on the company's approach to localizing production in response to tariffs; Lico explained that efforts involve accelerating existing contract manufacturing and shifting capacity, rather than major new investments.
Steve Tusa (JPMorgan) questioned the volatility in Test and Measurement demand versus the broader economy; Lico attributed this to delayed R&D investments among semiconductor and electronics customers, who are reassessing buying cycles amid tariff uncertainty.
Julian Mitchell (Barclays) asked about margin trends in Advanced Healthcare Solutions, especially the first-quarter decline; Vice President Elena Rosman clarified that margins typically ramp throughout the year and were temporarily affected by FX and fewer business days.
Joe Giordano (TD Cowen) inquired about competitive dynamics and tariff-related pricing in Precision Technologies, focusing on Tektronix; Lico noted the company's global manufacturing flexibility and ability to shift production to protect intellectual property and mitigate tariff impacts.
Chris Snyder (Morgan Stanley) asked how much of the tariff mitigation would be driven by price increases versus other actions; Lico estimated that about two-thirds would be from price, with the remainder from surcharges and operational adjustments.
In the coming quarters, our analysts will closely monitor (1) the effectiveness and speed of Fortive's tariff mitigation measures, (2) stabilization or potential recovery in the Precision Technologies segment, and (3) the execution of the Ralliant spin-off and any resulting changes in capital allocation or operational priorities. Progress in recurring revenue expansion and supply chain localization will also be important indicators of resilience.
Fortive currently trades at $70.08, in line with $69.61 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it's free).
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