FPS Stock Forecast & Price Target

Forgent Power Solutions is favored because its pure-play exposure to Electrical Distribution products aligns with powerful Data Center and Utility demand, with ~75% of sales tied to these end markets and sales up ~94% y/y to $462M in F4Q26. Order momentum is even stronger, with bookings of $1.503B (+375% y/y), backlog of $3.02B (+256% y/y), and management’s capacity expansion in Tijuana targeting ~$800M of added revenue capacity by FYE27, supporting long-duration growth visibility. Profitability is also improving despite ramp inefficiencies, as adjusted EBITDA reached $113M at a 24.4% margin, up 640 bps y/y, reinforcing the view that scale, customization, and lead-time advantages can drive higher margins over time.

Forgent Power Solutions is exposed to a highly concentrated demand driver in data centers, where any slowdown in AI-related capex could impair its long-term growth plan and also weaken grid-related sales tied to that build-out. Near term, accelerated hiring creates a $10M EBITDA headwind in F1Q, and while management expects about 200bps of q/q margin expansion in F2Q, execution risk remains elevated given ongoing capacity ramping, labor, and supply chain constraints. Its negative outlook is further supported by intense competition from larger peers such as ABB, Eaton, Schneider, and GE-Vernova, alongside a conservative leverage profile that may still be challenged if cash flow, estimated at over $213M implied FY27 guide, fails to offset M&A and expansion demands.