L.B. Foster shares rise on raised price target, maintains buy rating

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On Tuesday, Singular Research adjusted its share price target for L.B. Foster (NASDAQ:FSTR), a manufacturer of products for the transportation and energy infrastructure markets, to $26.50, up from the previous $23.25. The firm has also reiterated its Buy rating on the stock.

The upgrade comes after L.B. Foster reported a 7.7% year-over-year organic revenue growth for the fourth quarter of 2023. Additionally, the company saw a 200 basis point improvement in gross margins. L.B. Foster has provided guidance for fiscal year 2024, forecasting $543 million in sales and $36.5 million in EBITDA.

The company’s portfolio transformation is cited as a key driver for the positive results. Over the past two years, L.B. Foster has completed eight transactions aimed at growth and profitability. For the fourth quarter of 2023, the company not only showed strong organic growth but also achieved a significant increase in gross margin.

During fiscal year 2023, L.B. Foster has successfully reduced its net debt by $36 million, bringing its leverage ratio down to 1.7x from 2.8x the previous year. This financial improvement occurred despite challenges in the UK market. The firm’s outlook for L.B. Foster remains positive due to favorable conditions in its end markets.

L.B. Foster continues to target fiscal year 2025 goals of $600 million in revenues and $50 million in EBITDA. The company’s near- and medium-term growth prospects are reportedly intact, indicating a steady path toward achieving these targets.

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