On Tuesday, Singular Research adjusted its price target for shares of LB Foster (NASDAQ:FSTR), a maker of products for the transportation and energy infrastructure markets, to $26.50, down from the previous $23.25. The company also confirmed its Buy recommendation for the shares.
The increase comes after LB Foster reported organic revenue growth of 7.7% year-over-year for the fourth quarter of 2023. Additionally, the company recorded a 200 basis point improvement in gross margin. LB Foster provided guidance for fiscal 2024, forecasting sales of $543 million and EBITDA of $36.5 million.
Transformation of the company’s portfolio is considered a key driver of positive results. Over the past two years, LB Foster has completed eight transactions aimed at growth and profitability. In the fourth quarter of 2023, the company not only delivered strong organic growth, but also achieved significant gross margin expansion.
In fiscal 2023, LB Foster successfully reduced its net debt by $36 million, reducing its leverage ratio to 1.7x from 2.8x in the prior year. This financial improvement occurred despite challenges in the UK market. The company’s outlook for LB Foster remains positive due to favorable conditions in its end markets.
LB Foster continues to target fiscal 2025 revenues of $600 million and EBITDA of $50 million. The company’s short- and medium-term growth prospects are reported to remain unchanged, indicating a sustainable path to achieving these goals.
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