Badger Meter (BMI) Stock Forecast & Price Target

Badger Meter reported a 6% organic growth in Utility Water sales, driven by robust demand for its measurement and monitoring solutions, alongside a contribution of approximately $10 million from the SmartCover acquisition. The company successfully increased its normalized gross margin range to 39%-42% due to a favorable shift towards higher-margin products, resulting in a gross margin improvement of 170 basis points year-over-year to reach 41.1%. Additionally, organic revenue growth of around 7.5% highlights the company's strong market position and operational efficiency, underpinning a positive outlook for its financial performance.

The outlook on Badger Meter's stock is negative due to anticipated quarterly declines in total sales for 3Q25 attributed to the timing of new Advanced Metering Infrastructure (AMI) project starts, despite expected year-over-year organic sales growth. Additionally, there is concern regarding the possibility of a material slowdown below the company's high single-digit long-term organic growth outlook, which could significantly impact future performance. The recent sharp sell-off in shares, driven by higher-than-expected Selling, Engineering, and Administrative (SEA) expenses contributing to an operating miss in 2Q25, further underscores the financial challenges facing the company.