Stephens has increased its price target for Westinghouse Air Brake Technologies Corp to $290.00 from $230.00, while maintaining an Overweight rating on the shares. The new target implies upside from the company’s most recent market price of $254.42, which sits roughly 2% below its 52-week high of $260.59.
The boost in the target followed the company’s fourth-quarter 2025 adjusted earnings per share of $2.10, which exceeded Stephens’ forecast of $2.07 and the consensus estimate of $2.08. Stephens attributed the earnings beat primarily to revenue coming in above expectations, with partly offsetting pressure from transit margins that ran below forecasts.
Market valuation metrics show Westinghouse Air Brake trading at a price-to-earnings ratio of 36.08, a level noted as materially higher than the company’s historical average in the data referenced by the analyst firm.
Management provided 2026 revenue and adjusted EPS guidance that beat consensus forecasts by 3% and 1%, respectively. Order activity remained vigorous during the quarter, with a book-to-bill ratio of 1.6x, indicating orders substantially outpaced shipments. The company’s shares have responded positively year-to-date, posting a 32.21% total return over the past six months.
Stephens highlighted recent locomotive and locomotive modernization orders from U.S. Class I railroads as concrete evidence of durable demand. The firm characterized the company’s order pipeline as very strong and described Westinghouse Air Brake as "one of the more compelling long-term stories" in its coverage universe. In support of that view, Stephens cited three drivers: sustained domestic and international demand supporting organic growth; a free cash flow profile enabling accretive acquisitions or expanded share repurchases; and a regulatory environment in the U.S. that the analyst said is more conducive to adoption of the company’s advanced rail technologies.
The company’s reported fourth-quarter revenue was $3 billion, topping the forecast of $2.86 billion. Those results were presented as evidence of effective fiscal and operational performance during the quarter. The sequential and year-over-year detail beyond the headline EPS and revenue figures was not included in the analyst commentary.
Summary
Stephens raised its price target to $290 and retained an Overweight rating after Westinghouse Air Brake posted Q4 2025 adjusted EPS of $2.10 and revenue of $3 billion, both above estimates. Management’s 2026 guidance came in modestly ahead of consensus, and the company reported a 1.6x book-to-bill, supporting the analyst’s positive view.
Key Points
- Q4 2025 adjusted EPS: $2.10, above Stephens' $2.07 and consensus $2.08.
- Q4 2025 revenue: $3.00 billion, versus a $2.86 billion forecast.
- 2026 revenue and adjusted EPS guidance: 3% and 1% ahead of consensus, respectively; book-to-bill of 1.6x; six-month share return of 32.21%.
Risks and Uncertainties
- Valuation risk: the stock trades at a P/E of 36.08, materially above its historical average, which could amplify downside if growth or margins disappoint - this affects equity investors and portfolio managers focused on valuation-sensitive strategies.
- Margin pressure: transit margins in the quarter were weaker than expected and partially offset revenue strength, illustrating earnings sensitivity to margin performance - this is relevant to investors tracking operating leverage and cost dynamics in the industrial sector.
- Order and execution risk: while the order pipeline was described as very strong, any slowdown in locomotive orders or challenges in executing on backlog could affect revenue timing and free cash flow - relevant to suppliers, rail operators, and capital markets evaluating near-term cash flow durability.
Tags: WAB, rail, transportation, earnings, industrial