Investment firm Craig-Hallum has increased its price target for Knowles Corporation (KN, Financial) from $17 to $20. The revision comes as the firm considers Knowles' shares to be undervalued, largely due to the company's minimal exposure to tariffs.
Knowles, a key player in the capacitor market, has been attracting attention from both existing and prospective clients. This interest is attributed to the fact that almost all of its capacitors are manufactured within the United States, providing a strategic advantage in the current tariff landscape.
Craig-Hallum anticipates that Knowles will capitalize on its tariff-resistant position by seizing market share, thus justifying the upward revision in the stock's target price. The firm's enhanced outlook reflects a favorable assessment of Knowles' potential to navigate the challenges posed by international trade tensions effectively.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Knowles Corp (KN, Financial) is $20.00 with a high estimate of $25.00 and a low estimate of $16.00. The average target implies an upside of 27.80% from the current price of $15.65. More detailed estimate data can be found on the Knowles Corp (KN) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, Knowles Corp's (KN, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Knowles Corp (KN, Financial) in one year is $16.42, suggesting a upside of 4.92% from the current price of $15.65. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Knowles Corp (KN) Summary page.
KN Key Business Developments
Release Date: February 13, 2025
- Q4 Revenue: $143 million, within the guided range.
- Q4 Non-GAAP Diluted EPS: $0.27, within the guided range.
- Cash from Operations (Q4): $35 million.
- Full-Year Revenue Growth (2024): 21% increase from 2023.
- Full-Year Non-GAAP Diluted EPS Growth (2024): 32% increase from 2023.
- Med Tech and Specialty Audio Revenue (Q4): $70 million, flat year-over-year.
- Med Tech and Specialty Audio Full-Year Revenue Growth (2024): 8% increase from 2023.
- Precision Devices Revenue (Q4): $73 million, up 4% year-over-year.
- Precision Devices Full-Year Revenue Growth (2024): 36% increase from 2023.
- Q4 Gross Margin: 51.4%, down 130 basis points year-over-year.
- Precision Devices Segment Gross Margin (Q4): 38%, up 240 basis points year-over-year.
- R&D Expense (Q4): $9 million, up $1 million year-over-year.
- SG&A Expenses (Q4): $26 million, up $1 million year-over-year.
- Interest Expense (Q4): $3 million, flat year-over-year.
- Cash from Operations (Full-Year 2024): $130 million.
- Share Repurchase (Q4): 1.3 million shares at $24 million.
- Debt Reduction (Q4): $23 million.
- Cash Balance (End of Q4): $130 million.
- Debt Balance (End of Q4): $203 million.
- Net Leverage Ratio: 0.6 times trailing 12 months adjusted EBITDA.
- Q1 2025 Revenue Guidance: $124 million to $134 million.
- Q1 2025 EPS Guidance: $0.16 to $0.20 per share.
- Q1 2025 Cash Utilized in Operating Activities Guidance: $15 million to $5 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Knowles Corp (KN, Financial) reported a 21% revenue growth and a 32% increase in non-GAAP diluted EPS for the full year 2024, driven by strength in med tech and specialty audio.
- The company completed the sale of its Consumer MEMS microphone business, which is expected to streamline operations and focus on core business areas.
- Knowles Corp (KN) has a strong backlog of orders, particularly in the specialty film capacitor product line, which is expected to drive significant growth in 2025 and beyond.
- The Board authorized an additional $150 million for share repurchases, indicating confidence in the company's financial health and future prospects.
- The company has reduced its exposure to tariffs by minimizing its manufacturing footprint in China, with only about 5% of revenue potentially subject to tariffs.
Negative Points
- Challenges in plant consolidation and production ramp-up for new products in the specialty film capacitor line led to a revenue shortfall in Q4 2024.
- Pricing pressure was noted in the Medtech and Specialty Audio segment, particularly on mature products, which could impact future margins.
- The ramp-up of the specialty film product line is taking longer than expected, with full resolution anticipated by the end of the first half of 2025.
- Gross margins in Q4 2024 were down 130 basis points year-over-year due to lower average pricing on mature products and higher factory costs.
- The company expects to utilize cash in operating activities in Q1 2025, partly due to settling supplier obligations related to the Consumer MEMS microphone business.
