Last Update 27 Oct 25
Fair value Increased 2.24%Analysts have increased their price target for SPX Technologies from $201.64 to $206.15. They cite the company's resilient positioning in HVAC, robust demand outlook, and anticipated double-digit earnings and cash flow growth, even as some investors have expressed concerns about dilution resulting from a recent equity offering.
Analyst Commentary
Bullish analysts point to several factors supporting a positive outlook for SPX Technologies following recent market developments. While shares experienced a short-term pullback after the equity raise, many believe this weakness is only temporary and presents a potential buying opportunity. However, some points of caution and watchfulness remain as investors consider the company's path forward.
Bullish Takeaways- The recent dip in share price is viewed as a temporary setback, with expectations of renewed outperformance as the company leverages its strong industry position.
- SPX Technologies is viewed as well positioned for profitable growth, supported by its resilient business model in HVAC and a favorable demand environment for D&M.
- Analysts are optimistic about the potential for double-digit earnings and cash flow growth in the near future, citing consistent execution and a robust runway for value creation.
- Buyers are encouraged by the team's strategic execution and see incremental opportunities for long-term shareholder value, which supports a constructive valuation outlook.
- Some investors remain concerned about the initial dilution associated with the recent $500 million equity offering and how quickly this gap can be closed or offset.
- Uncertainty persists regarding the uses of the newly raised capital and management's plans for efficient redeployment to drive growth or returns.
- The timeline to realizing benefits from the equity offering is unclear, which contributes to cautious sentiment among some market participants.
What's in the News
- SPX Technologies completed a $500 million follow-on equity offering, issuing over 2.6 million shares of common stock at a discount to market price (Key Developments).
- The company announced a new share repurchase program that authorizes up to $100 million in buybacks (Key Developments).
- SPX Technologies raised its 2025 financial guidance and now expects revenue between $2.225 billion and $2.275 billion, representing approximately 13% year-over-year growth at the midpoint (Key Developments).
- Lock-up agreements have been placed on certain stock options, restricted stock units, and common stock, restricting executive and director sales from August 12, 2025, until October 12, 2025 (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has risen slightly from $201.64 to $206.15, reflecting increased optimism among analysts.
- Discount Rate has increased marginally from 8.18% to 8.30%, indicating a modest rise in perceived risk or a shift in cost of capital assumptions.
- Revenue Growth projections have improved from 8.87% to 9.31%, signaling stronger anticipated top-line expansion.
- Net Profit Margin has decreased slightly from 14.65% to 14.42%, suggesting expectations of slightly lower profitability margins going forward.
- Future P/E has fallen from 32.88x to 31.84x, indicating a modest reduction in expected earnings multiples for SPX Technologies.
Key Takeaways
- Expansion into energy-efficient cooling and HVAC solutions, along with capacity increases, supports higher sales, revenue growth, and stronger operating margins.
- Accretive M&A and rising demand for decarbonization solutions drive sustained growth, premium pricing power, and improved earnings visibility.
- Project-driven growth, heavy acquisition reliance, geographic concentration, and intensifying competition may heighten earnings volatility and threaten long-term margin sustainability if execution falters.
Catalysts
About SPX Technologies- Engages in the supply of infrastructure equipment serving the heating, ventilation, and cooling (HVAC); and detection and measurement markets worldwide.
- Expansion in data center cooling solutions, highlighted by the new OlympusV Max launch-which addresses the rapidly growing demand for energy-efficient, large-scale data center infrastructure-positions SPX to meaningfully expand its addressable market and top-line growth as hyperscale projects accelerate into 2026, supporting both revenue and margin improvement due to product differentiation and high-engineering requirements.
- Major capacity expansions in both Canada (Ingenia facility) and the U.S. (TAMCO/Ingenia), aimed at supporting demand surges in engineered air movement and custom HVAC solutions, are set to deliver significant incremental production by the first half of 2026 and beyond, enabling higher sales volumes and better operating leverage, which should boost future revenues and operating margins.
- A robust backlog and strong bookings growth in both HVAC (+19.5%) and Detection & Measurement (D&M, up 6% organically) divisions-combined with enhanced project pipeline visibility out through 2026-suggest sustained and resilient underlying end-market demand, driving forward revenue growth and enhancing earnings visibility.
- Consistently accretive M&A activity in niche, high-margin segments (illustrated by KTS and Sigma & Omega integrations) expands SPX's product set and market footprint; continued pipeline strength for bolt-on acquisitions is expected to fuel further revenue and earnings accretion and support long-term EBITDA expansion.
- Heightened regulatory and customer focus on decarbonization, water usage, and energy efficiency is driving rapid adoption of SPX's innovative, value-added solutions-especially in infrastructure modernization-supporting durable demand, premium pricing, and continued net margin expansion through increased differentiation and lower cyclicality risk.
SPX Technologies Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming SPX Technologies's revenue will grow by 8.9% annually over the next 3 years.
- Analysts assume that profit margins will increase from 10.3% today to 14.7% in 3 years time.
- Analysts expect earnings to reach $388.1 million (and earnings per share of $7.86) by about September 2028, up from $211.6 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.9x on those 2028 earnings, down from 43.4x today. This future PE is greater than the current PE for the US Machinery industry at 24.7x.
- Analysts expect the number of shares outstanding to grow by 0.86% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.18%, as per the Simply Wall St company report.
SPX Technologies Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The rapid growth in SPX Technologies' Detection & Measurement (D&M) segment is heavily project-driven, with several large projects pulled forward from 2026 to 2025; this could create a near-term revenue peak and subsequent growth deceleration or revenue lumpiness, raising long-term earnings volatility risk.
- The company's ambitious M&A strategy, while accretive so far, relies on continued successful integration of numerous acquisitions-any execution failures, overpayment, or synergy shortfalls could compress margins or dilute earnings for extended periods.
- The HVAC segment's recent margin expansion was partly due to unusually favorable project execution and an accretive business mix, dynamics that may not be sustainable; future gross and segment margins could revert lower if mix normalizes or execution is less favorable.
- SPX Technologies' end-market exposure remains concentrated in North America, particularly in U.S. commercial construction and infrastructure-this geographic concentration leaves the company vulnerable to regional economic slowdowns, construction cycle downturns, or delayed infrastructure spending, impacting long-term revenue growth and stability.
- While secular trends like data center expansion and decarbonization are tailwinds, the overall market for HVAC and detection equipment is facing increasing competition, potential product commoditization, and accelerating regulatory/tariff changes; these factors could pressure pricing power, erode net margins, and constrain sustainable earnings growth if SPX fails to innovate or defend its competitive position.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $201.643 for SPX Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $227.0, and the most bearish reporting a price target of just $167.5.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.6 billion, earnings will come to $388.1 million, and it would be trading on a PE ratio of 32.9x, assuming you use a discount rate of 8.2%.
- Given the current share price of $186.04, the analyst price target of $201.64 is 7.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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