Nordson Shares Decline Due to Weak Full-Year Guidance
On Thursday, shares of industrial equipment manufacturer Nordson Corporation fell by 8.5%. This decline came as a reaction to the company’s full-year guidance, which analysts perceived as weak. Despite reporting solid results, the company presented a cautious outlook for Fiscal Year 2025, citing a lower order book and cautious customer spending.
The company enters FY25 with a reduced order book of $580 million compared to $800 million at the beginning of the year, indicating an order-to-sales ratio of approximately 0.9x in the fourth quarter. Analysts from Jefferies maintained a 'hold' rating while highlighting the weaker guidance for FY25. KeyBanc Capital Markets reiterated a 'sector weight' rating, expressing disappointment over the significant declines in the order book relative to the initial FY25 outlook. However, DA Davidson maintained its 'buy' rating, noting that sales and adjusted operating profit exceeded expectations.
Nordson’s guidance for FY25 includes a range of adjusted earnings per share between $9.70 and $10.50, falling short of the Bloomberg Consensus estimate of $10.39. For the first quarter of FY25, the company forecasts sales between $615 million and $655 million against an estimate of $678.8 million, along with adjusted earnings per share ranging from $1.95 to $2.15.
Fourth-quarter results showed annual sales growth of 3.5%, reaching $744.5 million, surpassing the estimate of $736.2 million, with adjusted earnings per share of $2.78. Sales of industrial precision solutions decreased by 3.3% year-over-year, while advanced technology solutions grew by 4.7%. Total operating profit declined by 3.3% on an annual basis.
Evaluating the performance, Nordson's CEO commented on the cautious stance entering FY25 due to the evolving global macro environment and expected seasonal slowdown in the first quarter. Despite the cautious outlook, the CEO maintains confidence in long-term growth factors and emphasized the successful integration of Atrion Medical, which contributed positively to the quarter. Nordson's diversified portfolio and leadership in niche markets are expected to deliver balanced results despite the challenging macro environment. The company continues to work on its Ascend strategy aimed at achieving $3 billion in annual sales and an EBITDA margin exceeding 30% by 2025.