KeyBanc raises Gates Industrial to Overweight, says shares trading at discount

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KeyBanc raises Gates Industrial to Overweight, says shares trading at discount
Credit: © Reuters.

On Thursday, Gates Industrial Corp. (NYSE: GTES ) received an upgrade in its stock rating from KeyBanc, moving from Sector Weight to Overweight. Additionally, the firm set a new price target for Gates Industrial at $18.00.

The adjustment in rating and price target comes as the analyst at KeyBanc sees the current valuation of Gates Industrial shares as being excessively discounted, especially when compared to its industry counterparts and historical trends. This perspective takes into account the recent exit of private equity from its stake in the company.

Despite the recognized challenges in the short-cycle market, the analyst believes that the initial outlook provided by Gates Industrial has already accounted for these factors, effectively reducing the risks for the company's future earnings estimates. This is anticipated to pave the way for potential positive adjustments to earnings forecasts and stock performance as the year progresses.

KeyBanc anticipates that the eventual removal of the private equity overhang will contribute to a significant revaluation of Gates Industrial's stock. The firm also expects that upward revisions to the company's earnings per share (EPS) will further drive positive momentum in the stock's performance.

The upgrade and new price target reflect a confidence in Gates Industrial's capacity to outperform market expectations and adjust to the changing dynamics within its sector throughout 2024.

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