Stifel has reaffirmed a Hold recommendation on Donaldson Company (NYSE: DCI) and set a $96 price target, citing a distributor survey that points to cooling activity in the company’s Mobile Solutions Aftermarket. That target is materially below the stock’s quoted level of $107.88, which InvestingPro data indicates is above the name’s Fair Value estimate.
The research firm’s outreach covered 31 North American heavy truck and equipment distributors and dealers, participants who together account for an estimated 13% of Donaldson’s Mobile Solutions Aftermarket revenue. Results from the firm’s second-quarter fiscal 2026 snapshot showed sales up 0.4%, inventory essentially flat, and average selling price up 2.0% - each metric weaker than the comparable expectations tracked in Stifel’s prior survey, which stood at 1.2%, 1.9% and 3.4%, respectively.
Stifel highlights that the softer readings align with other analyst activity: InvestingPro Tips list three analysts who have cut earnings estimates for the upcoming reporting period. Donaldson’s next earnings release is scheduled in two days, according to the information provided.
Looking beyond the immediate quarter, dealers’ next-12-month expectations also decelerated. Forecasted sales growth eased to 3.2% from 3.9% in the earlier survey, while inventory expectations slipped to 0.4% from 2.7%. When respondents were asked to identify forces influencing demand, 19% pointed to the local economy, another 19% cited inflation, and 16% referenced government regulations as the primary headwinds.
Sentiment among distributors toward the broader economic outlook has also shifted: 35% of those surveyed now expect a recession within the next 12 months, up from 28% recorded in the first-quarter fiscal 2026 survey.
Donaldson, which manufactures filtration systems and replacement parts for industrial and engine applications, has simultaneously reported corporate developments that bear on its strategic profile. The company posted first-quarter fiscal 2026 results beating consensus on both the top and bottom lines, with EPS of $0.94 versus a forecast of $0.92 and revenue of $935.4 million compared with a $922.62 million estimate.
In a material M&A move, Donaldson disclosed a definitive agreement to acquire Filtration Group’s Facet Filtration business in an all-cash transaction valued at approximately $820 million. Company commentary indicates the purchase is intended to strengthen Donaldson’s fuel and fluid filtration capabilities, with particular emphasis on aerospace and defense end markets.
At the same time, the company’s board announced a leadership change: Chief Operating Officer Richard Lewis was elected president and CEO effective March 2, 2026, succeeding Tod Carpenter, who will become executive chairman.
On the analyst front, Jefferies upgraded Donaldson from Hold to Buy, citing a recovery in the mining and non-residential construction markets. Separately, Stifel maintained its Hold rating and $96 price target on the company’s shares. The firm also raised its price target to $96, maintaining a Hold rating, following the company’s strong first-quarter performance.
Context and implications
The distributor survey points to a moderation in aftermarket demand and inventory appetites among a sample set representing a meaningful portion of Donaldson’s Mobile Solutions Aftermarket revenue. The company’s recent earnings beat and the planned acquisition provide growth and capability-building signals, while the survey and analyst estimate revisions emphasize caution on near-term demand.