Seaport Research Trims Badger Meter Price Target Amid Slower Growth, Maintains Buy Rating
Water infrastructure technology firm Badger Meter, Inc. (NYSE:BMI) saw its price target reduced by Seaport Research on Tuesday, reflecting near-term growth concerns while underscoring confidence in its long-term trajectory.
Analyst Scott Graham cut the price objective to $220 from $255 but reaffirmed a Buy rating on the stock. In a research note, Graham pointed to a slower-than-expected sales growth rate in the first half of the 2025 fiscal year as the primary reason for the adjustment. However, he noted that visibility for a rebound in the latter half of the year has improved, supported by strong project pipelines and integration efforts.
The revision comes just weeks after Badger Meter reported its fourth-quarter and full-year 2025 results. Chairman, President, and CEO Kenneth Bockhorst described finishing the year with "strong momentum," citing record annual sales, profits, and cash generation. "Our cellular AMI demand remains robust, and the integration of SmartCover into our BlueEdge platform is progressing exceptionally well," Bockhorst stated during the earnings call. He highlighted a major project win with Puerto Rico's water authority, PRASA, as a key milestone that strengthens the company's competitive positioning in smart water management.
Financially, the quarter remained solid. CFO Daniel Weltzien reported Q4 sales of $221 million, an 8% year-over-year increase, with base sales up 2%. Operating margins expanded to 19.5% from 19.1%, and gross margins saw a significant improvement to 42.1% from 40.3% in the prior-year period.
Despite the target cut, Badger Meter continues to be recognized for its stability. The company was recently included in a list of top low-risk dividend stocks, appealing to investors seeking exposure to essential water infrastructure with lower volatility.
Market Voices
Robert Chen, Portfolio Manager at Clearwater Capital: "This is a tactical adjustment, not a thesis change. The fundamentals of water infrastructure digitization are intact. Badger Meter's margin expansion and the PRASA contract demonstrate execution. We see the current price as a buying opportunity."
Sarah Jenkins, Independent Water Sector Analyst: "The target reduction is a sobering reminder that even sector leaders face quarterly execution risks. While the long-term story is compelling, investors should question if growth expectations for the full year are now at risk."
Marcus Thorne, Editor at 'The Hard Line' Financial Blog: "Here we go again. Another 'Buy'-rated stock gets a $35 price target chop. If visibility was so poor six months ago, where was the warning? This feels like analysts playing catch-up. The 'strong second half' promise is becoming a tired refrain for missed early-year numbers."
Dr. Anika Sharma, Engineering Professor & Sustainability Consultant: "The market's short-term reaction overlooks the criticality of Badger Meter's work. In an era of worsening water scarcity and aging infrastructure, their technology is not just a product—it's a necessity. Financial metrics should be weighed against this systemic importance."
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Disclosure: None. This article is for informational purposes only and does not constitute investment advice.