DA Davidson has increased its price objective for Modine Manufacturing (NYSE:MOD) to $255.00 from $200.00 and reiterated a Buy rating on the shares. The updated target implies room for further gains from Modine's most recent share price of $184.99, which has climbed 21.05% over the last week and is trading close to its 52-week high.
The brokerage tied the higher target to a set of company developments and adjusted forecasts. DA Davidson cited Modine's announced Performance Technologies spinoff arranged as a Reverse Morris Trust and said the firm has materially boosted its data center revenue targets through fiscal year 2028. Those changes, the research house said, supported a more bullish valuation posture.
Modine, which carries a market capitalization of about $9.8 billion, is trading at a price-to-earnings ratio of 50.25. InvestingPro data referenced by the research firm indicates that this multiple is high when compared with expected near-term earnings growth, signaling a valuation premium that investors should note.
DA Davidson described an increased level of bullishness on Modine, saying there is "considerable further rerate potential" as the company shifts toward becoming a more pure-play data center solutions provider over the next couple of years. The firm also pointed to operational indicators it views positively, noting that Modine's quote-to-order conversion rates "appear impressively high" and that price premiums have remained intact across its product lines.
In its modeling, DA Davidson said it is moving its valuation framework toward treating Modine as a Climate Solutions-only company and is raising its data center revenue assumptions through fiscal 2028. The combination of those methodological changes and the revenue upside are what underpinned the move to a $255 target.
Separately, Modine has announced a roughly $1 billion transaction to fold its Performance Technologies business together with Gentherm, structured as a Reverse Morris Trust. Under the terms disclosed by the company, Modine shareholders are expected to own approximately 40% of the combined entity after the transaction closes.
Those strategic decisions have prompted a string of analyst updates. KeyBanc Capital Markets lifted its price target on Modine to $205, characterizing the Performance Technologies spinoff as a positive step in the companys transformation. Oppenheimer increased its target to $220, pointing to a constructive growth outlook following Modine's recent business update call.
DA Davidson's earlier commentary noted market dynamics and remarks around cooling requirements tied to NVIDIA's new chip technology as part of its assessment. Although DA Davidson previously reiterated a Buy rating with a $200 price objective on the stock in light of those considerations, its latest revision moves the target to $255 while keeping the Buy stance.
The sequence of strategic moves - the Reverse Morris Trust transaction, heightened data center revenue targets and multiple analyst target increases - mark a period of active repositioning for Modine. Investors and market participants will be watching execution on the spinoff and whether the company can meet the elevated data center revenue trajectory implied in the analysts' models.