Jefferies initiates Gates Industrial stock with buy, sets $21 target

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Jefferies initiates Gates Industrial stock with buy, sets $21 target
Credit: © Reuters.

On Thursday, Gates Industrial Corp. (NYSE: GTES ) received a positive outlook from a leading financial firm as it began its coverage of the company's stock. The firm issued a Buy rating and established a price target of $21.00 for the industrial manufacturer.

The new assessment highlighted Gates Industrial as a particularly promising opportunity for self-improvement within the sector. Analysts pointed out the company's significant potential for margin growth, which they believe can be achieved largely independently of sales volume.

Currently, Gates Industrial boasts EBITDA margins in the low twenties. The firm anticipates that this figure has room to grow, projecting an increase to the mid-twenties range. This margin expansion is expected to bolster the company's financial health and profitability.

In addition to the margin improvement, the firm also noted Gates Industrial's strong free cash flow (FCF). This robust cash generation is seen as a key factor that will enable the company to reduce its debt, further strengthening its balance sheet and financial position.

The price target of $21.00 reflects the firm's confidence in Gates Industrial's ability to execute on its margin improvement and debt reduction strategies.

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