Baird has reiterated an Outperform rating on Knowles Corporation (NYSE: KN) and kept its $30.00 price target, emphasizing the company’s positioning for continued organic revenue growth. The research note notes that Knowles is trading close to its 52-week high of $25.57 and has delivered a 33.3% total return over the last year.
The firm expects Knowles to exceed its historical growth trajectory, driven by new design wins that are moving into production and a healthy backlog that supports near-term revenue visibility. Baird’s analysis indicates that channel inventories have now normalized, which the firm views as removing a prior headwind to demand realization.
Baird also highlights that an energy order for the company remains on track and that Knowles is not encountering constraints even as the broader industry faces what the analyst describes as a tightening environment. That relative freedom from supply limitations is cited as a competitive advantage against peers contending with supply-chain pressures.
On profitability, Baird expects gross margin expansion over the course of the year, which could improve overall earnings leverage as revenue grows. The company reported a gross profit margin of 43.9% and operates with a moderate level of debt; its current ratio of 1.9 suggests liquid assets exceed short-term liabilities by a comfortable margin.
Despite the positive operational read, valuation metrics look elevated. InvestingPro analysis referenced by the report shows Knowles trading at a price-to-earnings ratio of 60.3, a level described as slightly higher than the stock’s Fair Value estimate. Baird retained its Outperform rating, reflecting a favorable view of the company’s business trajectory relative to the market.
The company’s most recent quarterly results for the fourth quarter of 2025 underscored the improving fundamentals. Knowles reported earnings per share of $0.36, marginally above consensus expectations of $0.35, and revenue of $162 million, exceeding the projected $156.23 million. These outcomes prompted commentary from several investment analysts and contributed to investor attention on the name.
Analyst revisions also point to upward momentum in profitability forecasts. InvestingPro data cited in the research indicates net income is expected to grow this year, with three analysts recently increasing their earnings estimates.
In sum, Baird’s reaffirmation rests on a combination of top-line catalysts - namely design-win ramps and backlog strength - and improving unit economics through margin expansion. The firm acknowledges sector-wide tightening but sees Knowles navigating that environment without meaningful production constraints.
Summary
Baird has reiterated an Outperform rating and $30.00 price target on Knowles, citing normalized channel inventories, accelerating design-win ramps and expected gross margin expansion. The company beat fourth-quarter 2025 estimates on revenue and EPS and is trading near its 52-week high after a strong 12-month return. Valuation appears elevated versus Fair Value, with a reported P/E of 60.3.
Key points
- Baird keeps an Outperform rating and $30 price target on Knowles, highlighting momentum from new design wins and a healthy backlog - sectors impacted include semiconductor components and electronics supply chains.
- Channel inventories have normalized and an energy order is proceeding on schedule; the company is reportedly not facing production constraints despite a tightening environment - relevant to supply-chain and industrial markets.
- Knowles posted Q4 2025 results above consensus - EPS of $0.36 vs $0.35 and revenue of $162 million vs $156.23 million - underscoring improving fundamentals.
Risks and uncertainties
- Valuation risk - the stock trades at a high P/E of 60.3, which InvestingPro notes is slightly elevated compared with its Fair Value estimate; this impacts equity valuations in the semiconductor supply chain sector.
- Sector tightening - while Knowles is reported not to be facing constraints, broader industry tightening remains an uncertainty that could affect suppliers and customers across electronics and industrial end markets.