What Happened?
Shares of manufacturing company IDEX (NYSE: IEX) jumped 3.6% in the afternoon session after the industrials sector rallied on renewed optimism for a potential Federal Reserve interest rate cut and an agreement to extend the U.S.-China tariff truce. The positive sentiment stems from a recent tame inflation report, which boosts the likelihood of lower borrowing costs—a key stimulant for economic activity that benefits cyclical sectors like industrial products. This optimism was amplified by an agreement to extend the U.S.-China tariff truce, alleviating concerns about trade disruptions. This is particularly relevant for IDEX, as its management had previously cited “unpredictable trade policy changes and tariff announcements” as a source of volatility in customer orders. The macro tailwinds are further supported by a 'Moderate Buy' consensus rating from analysts and disclosures from the first quarter showing increased investment from firms like Deutsche Bank AG and Mitsubishi UFJ Asset Management.
The shares closed the day at $163.26, up 3.6% from previous close.
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What Is The Market Telling Us
IDEX’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 8.1% on the news that after the company slashed its full-year profit forecast, overshadowing second-quarter results that beat expectations. Although the company's second-quarter adjusted earnings and revenue surpassed Wall Street expectations, investors focused on the bleaker outlook. The company attributed the revised forecast to a challenging operating environment and slowing demand for its industrial equipment as customers grew more cautious with larger orders amid economic uncertainty. IDEX slashed its full-year adjusted earnings per share guidance to a range of $7.85 to $7.95, which was notably below the analyst consensus of $8.20. The third-quarter forecast also fell short of expectations, signaling a tougher second half of the year for the company.
IDEX is down 20.7% since the beginning of the year, and at $163.32 per share, it is trading 30.8% below its 52-week high of $236.06 from November 2024. Investors who bought $1,000 worth of IDEX’s shares 5 years ago would now be looking at an investment worth $922.82.
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