Fortive Corporation operates as a diversified industrial company, providing essential technologies for connected workflow solutions across various end-markets. The company specialises in professional instrumentation as well as automation, sensory, and transportation products that are used in healthcare facilities, laboratories, and large construction sites. In addition to hardware and software solutions, the company also has an after-sales service offering.
Growth over the past few years has been mixed. From FY16 to FY19, revenue and adjusted EPS grew ~6% and ~13%, respectively, on a compounded annual basis. During the Covid-19 pandemic, however, revenue (-37%) and earnings (-40%) both dropped significantly as mobility restrictions severely impacted production. The company has made a decent recovery since but has not yet reached pre-pandemic levels due to lagged demand from China.
Technically, the stock presents a tactical investment opportunity, with a likelihood of reaching its all-time highs once again. Investor psychology will play a key role in driving the price upwards, given that the stock is near its previous highs (refer to the fist chart). Essentially, because investors fear missing out on a potential short-term trade opportunity, demand for the stock could rise, ultimately leading to strong price appreciation beyond the previous psychological barrier (i.e., the previous all-time high).
The stock is trading above its 200-day simple moving average of ~$71.35, suggesting a strong upward trend.
Prevailing upside momentum, according to the MACD indicator as well as upwards movement of the on-balance volume indicator, supports a bullish stance.
Share Information
| Share Code | FTV US |
|---|---|
| Industry | Industrial and Electronic Equipment |
| Market Capital (USD) | 26.11 billion |
| One Year Total Return | 11.48% |
| Return Year-to-Date | 0.90% |
| Current Price (USD) | 74.29 |
| 52 Week High (USD) | 79.90 |
| 52 Week Low (USD) | 62.70 |
| Financial Year End | December |
| The stock price has made a decent recovery over the past three months with various technical indicators suggesting further upside ahead. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 3.15 | 3.39 | 3.67 | 4.03 |
| Growth (%) | 7.59 | 8.32 | 9.81 | |
| Dividend Per Share (USD) | 0.28 | 0.28 | 0.30 | 0.31 |
| Growth (%) | 1.43 | 3.87 | 4.07 | |
| Forward PE (times) | 20.10 | 18.26 | 18.43 | |
| Forward Dividend Yield (%) | 0.40 | 0.42 | 0.41 | |
| Consensus is quite positive on the stock, with decent growth expected yearly over the medium-term. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | AMZN - Buy (Continue to hold) |
CARZ - Buy (Continue to hold) |
XLP - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 138.07 | 53.61 | 70.66 |
| Current | 157.75 | 55.55 | 72.28 |
| Movement | 14.3% | 3.6% | 2.3% |
|
A developing megaphone pattern remains of interest. The stock remains above its 200-day moving average. Emerging upside price momentum is supportive.
Our profit target remains at $200 with a trailing stop-loss at $148.70. Exit the trade by 23 February 2024. |
An incomplete symmetrical triangle pattern remains of interest. The ETF remains just above its 200-day moving average. Fading upside price momentum is a concern.
Our profit target remains at $60 with a trailing stop-loss at $53.40. Exit the trade around 22 May 2024. |
A price retracing from the lower range of the Bollinger bands remains of interest. The ETF continues to test its 200-day moving average. Upside price momentum has halted, which is a concern.
Our profit target remains at $76 with a trailing stop-loss of $70.60. Exit the trade by 9 February 2024. |
| Share Name and position | J - Buy (Continue to hold) |
GILD - Buy (Continue to hold) |
LKQ - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 133.83 | 80.00 | 47.92 |
| Current | 135.71 | 80.23 | 47.51 |
| Movement | 1.4% | 0.3% | -0.9% |
|
Price action holding above key support. The stock remains above its 200-day moving average. The MACD indicator suggests an imminent shift in the price trend.
Our profit target remains at $150, with a trailing stop-loss at $129.20. Exit the trade by 23 February 2024. |
The stock rebounded off its 200-day moving average though upside price momentum has halted.
Our profit target remains at $97 with a trailing stop-loss at $73. Exit the trade around 19 April 2024. |
The formation of a large bullish flag pattern remains of interest. The stock is trading below its 200-day moving average and we maintain a counter-trend strategy. Emerging upside momentum is supportive.
Our profit target remains at $55 with a trailing stop-loss at $46. Exit the trade around 22 May 2024. |
