Badger Meter (BMI) Stock Forecast & Price Target

Badger Meter has demonstrated a strong financial performance, with Utility Water sales increasing by 6% organically, bolstered by robust demand for their products and a notable contribution of approximately $10 million from the SmartCover acquisition. The company has successfully expanded its normalized gross margin range from 38%-40% to 39%-42%, reflecting a positive shift towards higher-margin products such as Orion cellular radios and E-Series meters. Additionally, Badger Meter achieved a year-over-year gross margin expansion of 170 basis points, resulting in a current gross margin percentage of 41.1%, which underscores the company's effective management and operational efficiency.

Badger Meter is facing a negative outlook primarily due to an anticipated quarter-over-quarter decline in total sales for 3Q25, attributed to delays in new AMI project starts, despite the expectation for year-over-year organic sales growth. Additionally, there is concern about potential material slowing in revenue growth, which could fall below the company's long-term high-single-digit percentage (HSD%) forecast for organic growth. The operating miss in 2Q25, largely driven by higher-than-expected Selling, Engineering, and Administrative (SEA) expenses, has raised questions about the company's financial stability and profitability in the near term.