Badger Meter (BMI) Stock Forecast & Price Target

Badger Meter reported a 6% organic increase in Utility Water sales, driven by robust demand for its meters, software, and remote monitoring solutions, alongside a ~$10 million contribution from the SmartCover acquisition. The company also improved its normalized gross margin range, raising it from 38%-40% to 39%-42% due to a positive structural mix shift toward higher-margin products. Additionally, Badger's gross margin percentage expanded by 170 basis points year-over-year to 41.1%, indicating effective management of costs and strong operational performance.

Badger Meter is projecting a quarter-over-quarter decline in total sales for 3Q25, attributed to the timing of new Advanced Metering Infrastructure (AMI) project starts, raising concerns about short-term revenue performance. Additionally, the company faces risks associated with a potential significant slowdown in its long-term organic growth outlook, which could further undermine investor confidence. Lastly, a notable increase in Selling, Engineering, and Administrative (SEA) expenses during 2Q25 has contributed to an operating miss, highlighting operational inefficiencies that pose challenges to future profitability.