On Monday, Craig-Hallum initiated formal coverage of Thermon Group Holdings (NYSE: THR), assigning a Buy rating and setting a price target of $60.00. At the time the note was published, Thermon shares were trading at $46.98, implying roughly a 28% upside to the analyst's target.
The research house emphasized Thermon's strategic reorientation from a business concentrated in longer-cycle, cyclical oil and gas markets to a broader, more diversified mix of end-markets. According to data cited in the note, the company has achieved a Piotroski Score of 9, a mark the analyst used to signal strong underlying financial health.
Craig-Hallum described Thermon as evolving into a shorter-cycle, higher-margin company. The firm pointed to secular tailwinds in several end-markets and singled out a newly introduced product aimed at the data center market as a potential growth driver. The analyst also highlighted Thermon's margin profile, noting a gross profit margin of 45.43% in current results.
On the consensus front, the note recorded that three analysts have revised earnings estimates higher for the upcoming period, and that Thermon is trading at a PEG ratio of 0.7 - framed by Craig-Hallum as a relatively low P/E given near-term earnings growth potential.
Valuation metrics featured prominently in the coverage. Craig-Hallum observed that Thermon shares are priced above the company's 10-year forward multiple - approximately 10.5x EV/EBITDA - while current data points to an EV/EBITDA ratio near 15.14x. The research team also noted the stock is trading above its Fair Value estimate.
The firm argued that the market has not fully recognized the company's strategic shift and its potential for accelerated growth, a perspective that underpins the Buy rating and the $60 target. The note also references that Thermon is included among more than 1,400 U.S. equities covered with a comprehensive Pro Research Report on InvestingPro.
Recent results
Thermon's second-quarter 2025 results were described as notable in the research note. The company posted adjusted earnings per share of $0.55, compared with a consensus forecast of $0.365 - a 50.68% earnings surprise. Revenue for the quarter was reported at $131.7 million, ahead of an expected $119.95 million. Craig-Hallum noted that the earnings announcement was met positively by the market.
These results were cited alongside the other indicators as evidence of improving operational performance and momentum across Thermon's addressable markets.
Outlook and positioning
The initiation places emphasis on Thermon's repositioning and potential to capitalize on shorter sales cycles and higher margins. Craig-Hallum frames the new data center product as a tangible example of that opportunity, while pointing to the company's strong profitability metrics and recent upward earnings revisions as supporting evidence.
At the same time, valuation measures and the fact that the stock trades above its Fair Value estimate are explicit elements of the coverage, indicating an elevated starting point for any further upside.