ESAB Corp (ESAB) Stock Forecast & Price Target

ESAB is positioned favorably because its portfolio has shifted toward higher-margin equipment and adjacent inspection and gas-control businesses, with pro forma equipment sales expected to reach roughly 52% of sales and higher-growth categories now making up about 50% of pro forma sales versus 38% in 2016. The Eddyfi acquisition is especially supportive, adding about $270M of revenue, roughly 65% adjusted gross margin, 30% adjusted EBITDA margin, and about 55% recurring revenue, while expanding exposure to nuclear, infrastructure, energy, and aerospace and defense. Although leverage and dilution remain near-term overhangs, the business is expected to generate strong free cash flow, reduce net debt from about $2.32B to $1.607B, and lift leverage from 3.7x to 2.3x by FY27E, supporting earnings quality and multiple expansion.

ESAB is viewed negatively because its 2Q26 revenue beat did not translate into stronger per-share earnings: core adjusted EPS of $1.35 missed consensus, FY26 core EPS guidance fell to $5.40-$5.50, and adjusted EBITDA margin slipped 90 bps to 19.5% as logistics, commodity, and growth-investment costs weighed on profitability. The Eddyfi acquisition added financing expense, dilution from mandatorily convertible preferred stock and about 1.25M new common shares, and left net debt at roughly $2.32B, or about 3.7x FY26 adjusted EBITDA, limiting near-term earnings quality. Geopolitical exposure in the Middle East, which represents about 7%-8% of revenue, plus continuing Russia sales and uncertain margin recovery, supports a durable valuation discount versus peers.