ESAB Corp (ESAB) Stock Forecast & Price Target

ESAB is viewed favorably because its portfolio shift toward higher-margin equipment, gas control, and advanced inspection is improving growth quality, with pro forma sales from these categories rising to about 50% versus 38% in 2016 and equipment expected to reach roughly 52% of sales. The Eddyfi acquisition adds about $270 million of 2026 revenue, around 65% adjusted gross margin, 30% adjusted EBITDA margin, and roughly 55% recurring revenue, while expanding exposure to nuclear, infrastructure, energy, and aerospace and defense. Management’s deleveraging plan, combined with free cash flow generation and expected leverage declining from 3.7x to 2.3x by FY27E, supports the view that balance-sheet risk is temporary and that margins, earnings, and valuation can improve.

ESAB is facing a bearish setup because the market is looking past the 2Q26 revenue beat and focusing on the $1.35 core adjusted EPS miss, the lowered FY26 core EPS guide of $5.40-$5.50 versus $5.69 consensus, and the 90bps decline in core adjusted EBITDA margin to 19.5%. The Eddyfi deal adds higher interest expense, dilution from mandatorily convertible preferred stock and about 1.25M new common shares, while net debt of roughly $2.32B leaves leverage near 3.7x FY26 adjusted EBITDA, limiting near-term per-share earnings power. Its valuation also remains pressured by durable geographic risk, including Middle East exposure of about 7%-8% of revenue and ongoing Russia sales reporting outside core results, which supports a persistent discount to peers until leverage and execution improve.