Analyst Note| Joshua Aguilar |
Narrow-moat Ametek’s second-quarter results were broadly in line with our expectations. We reduce our fair value estimate to $120 per share from $123, though this was entirely due to incorporating Morningstar’s probability-adjusted U.S. tax rate of 26% in 2022 and beyond in our discounted cash flow model. Without this impact, our fair value would have increased by 3% to $127, given that management raised full-year guidance to $4.65 at the midpoint from $4.52 previously. Management’s sunnier outlook for the year prompted us to raise our estimates for the year, particularly as we thought it previously baked in some conservatism, given the uncertain operating environment (particularly the semiconductor supply shortage) and the add-back of certain temporary COVID-related cost savings.