Electrification Is The New Hotness at Fortive: Are Shares Poised for Growth or Decline in 2025?

Seattle, Washington – Fortive Corporation, a once highly regarded company, seems to have lost some of its luster in the eyes of investors recently. Despite delivering positive financial results, the company has failed to excite the market as it did in the past. Analysts believe that one of the reasons for this is Fortive’s lack of a clear thematic focus, making it less appealing to investors who are now looking for higher-growth opportunities in other sectors.

Investors have shifted their attention away from stories driven by mergers and acquisitions in Software-as-a-Service (SaaS) and recurring revenue, which were previously Fortive’s main source of growth. The company’s recent slower growth trajectory has caused some concern among bullish investors who once saw great potential in Fortive’s prospects.

However, Fortive is not without its strengths. The company’s test and measurement offerings could benefit from a potential short-cycle recovery and longer-term trends like electrification. Additionally, its automation-driven businesses within Precision Technologies show promise for future growth. Despite these positives, some analysts believe that there are more compelling investment opportunities available within the industrial sector.

Fortive’s strategic shift towards electrification and artificial intelligence (AI) is an interesting development, with the company aligning a significant portion of its revenue to these emerging technologies. This shift reflects management’s effort to adapt to market trends and capitalize on new growth opportunities. However, some investors remain cautious about the company’s acquisition strategy, particularly its focus on high-priced deals in hot sectors like electronic test and measurement.

The company’s exposure to short-cycle markets, such as general manufacturing, poses a potential risk given the current economic uncertainties and market conditions. Despite some positive indicators, including increased business activity in certain segments, Fortive’s reliance on short-cycle businesses remains a concern for investors.

Fortive’s software businesses have shown relative resilience, with steady mid-to-high single-digit growth rates. The company’s foray into healthcare, although not without challenges, has seen some positive developments, particularly in sales revitalization efforts. While some segments of the healthcare business have underperformed, management’s strategic initiatives are aimed at driving growth and improving margins.

Looking ahead, analysts expect moderate revenue growth for Fortive in the coming years, driven by key trends like automation and electrification. The company’s focus on M&A activity is seen as a potential driver of revenue growth, although margin expansion may be limited. Overall, Fortive is considered modestly undervalued, with potential for growth in the mid-to-long term but facing competition from other more compelling investment opportunities in the market.