Badger Meter (BMI) Stock Forecast & Price Target

Badger Meter’s positive outlook is supported by an increase in its normalized gross margin range, which has risen from 38%-40% to 39%-42%, reflecting a favorable shift towards higher-margin products including Orion cellular radios and E-Series meters. The company reported organic revenue growth of approximately 7.5%, alongside a contribution of $11.1 million from SmartCover, indicating strong sequential revenue growth and a healthy trajectory in sales. Additionally, gross margins expanded by 50 basis points year-over-year, highlighting ongoing structural improvements and the efficacy of Badger Meter's strategic focus in the water management sector.

Badger Meter's recent financial performance has shown a decrease in base revenue growth, primarily due to the conclusion of various AMI turnkey projects, leading to results that fell short of the company's five-year growth expectations. The company's flow instrumentation sales have remained stagnant year-over-year, indicating weak demand despite some modest growth in water-focused end markets, while concerns about the sustainability of market growth loom, especially in light of potential funding challenges post-2027. Additionally, the company faces risks related to overspending in water technology mergers and acquisitions, which could pressure earnings per share and negatively impact its valuation relative to peers.