We are reiterating our Neutral recommendation on Badger Meter with
a target price of $54.00. In fourth-quarter 2013, Badger Meter
reported record earnings of $0.44 per share, up 12.8% year over
year. Badger Meter will continue to benefit from investment in
research and development as well as the introduction of several new
products. Introduction of E-Series ultrasonic meters with a polymer
version and BEACON Advanced Metering Analytics system will help to
meet growing customer needs. However, higher construction costs,
labor shortage and adverse effects of sequestration may affect the
performance of Badger Meter, going forward.
Headquartered in Milwaukee, Wisconsin, Badger Meter Inc.
provides liquid flow measurement products and control technologies
serving water and gas utilities, municipalities and industrial
customers worldwide. The company's products, which are developed
both internally and in collaboration with other technology
companies, are used in a wide variety of applications, including
water, oil and chemicals. The company's product lines fall into
three categories. They are as follows:
Municipal water: This is the largest category by sales volume.
It involves sales of meters, and related technologies and services
used by water utilities as the basis for generating water and
wastewater revenues. The key market is North America, primarily the
United States, as the meters are designed and manufactured to
conform to standards promulgated by the American Water Works
Association. Sales of water meters and related technologies and
services are commonly categorized as residential or commercial
water meter, the latter referring to larger sizes of meters.
Industrial flow: It includes products sold for other water-based
purposes, including irrigation, water reclamation and industrial
process applications. It also comprises meters and related
technologies and services for measuring a wide variety of fluids in
industries such as food and beverage, pharmaceutical production,
petroleum, heating, ventilating and air conditioning (HVAC),
measurement and dispensation of automotive fluids.
Specialty products: This category includes sales of radio
technology to natural gas utilities for installation on their gas
meters, valves and concrete vibrators.
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