Why ABM Industries Topped the Market Today

Key Points

ABM Industries (NYSE: ABM) stock kicked off the trading week on a high note Monday, closing more than 3.5% higher in price following two recommendation upgrades from analysts tracking the stock. That performance was more than good enough to eclipse the bellwether S&P 500 index, which essentially flatlined that day.

Investors overreacted to results, says analyst

Those pundit updates came one business day after ABM released its second quarter of fiscal 2025 earnings report. The company notched a minor beat on the consensus analyst estimate for revenue but missed slightly on that for profitability.

Investors didn't greet this development warmly, and their immediate reaction as a group was to trade out of ABM's shares. The situation flipped on Monday, however, as the pair of pundits published new takes on the stock before market open.

The first upgrade came from Baird's Andrew Wittman. He upgraded his recommendation on ABM to outperform (i.e., buy) from the previous neutral at a price target of $56 per share. According to reports, Wittman feels the sell-off was unjustified and leaves the stock attractively priced, especially since the company has been effective at securing new work.

Good business with business and industry

His peer Joshua Chan at UBS also became notably more bullish on ABM with a recommendation change to buy from neutral (in his case, tagging the stock with a $50 per share price target). According to reports, Chan was particularly encouraged by renewed growth in the company's core business and industry segment.

Personally, I'd fall between those bearish investors selling off ABM stock Friday and the analysts upping their recommendations. Yes, the company has reported some encouraging developments of late, but it's neither a strongly growing business nor a high-yielding dividend payer. I'd probably look elsewhere for stocks with better potential.

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