Narrow-moat-rated Idex IEX reported solid second-quarter results, including a 3% year-over-year organic sales increase, but lowered its full-year guidance for the second time this year due to softness in the health and science technologies segment. We’ve trimmed our fair value estimate to $217 per share from $221 to reflect our slightly more muted near-term revenue growth and operating margin projections, partially offset by the time value of money.
Fluid and metering technologies delivered 10% year-over-year organic revenue growth, fueled by healthy demand in the water, energy, and chemical end markets. Health and science technologies organic revenue decreased 6% due to headwinds in the semiconductor, life sciences, and analytical instrumentation end markets. Fire and safety and diversified products core revenue was up 8%, with continued solid momentum in Band-It as well as fire and rescue. Idex expanded second-quarter adjusted EBITDA margin by 90 basis points year over year, from 27.5% to 28.4%, thanks to a favorable price/cost spread and productivity, partially offset by unfavorable mix and lower volume leverage.
Management lowered its outlook for the full year. It now anticipates a 1%-2% organic sales decline (0%-3% growth previously) and adjusted EPS of $7.90-$8.00 ($8.25-$8.55 previously). The updated guidance bakes in a slower recovery in the health and science technologies segment, which is facing an inventory correction after two years of strong growth during the pandemic. While excess inventory in the channel will remain a headwind in the second half of the year, we remain optimistic about long-term secular drivers in the health and science technologies business.
