William Blair initiated research coverage of UL Solutions Inc. (ULS $35.40), a leading global provider of testing, inspection, and certification (TIC) services and related software and advisory solutions.
Analyst Andrew Nicholas estimated that UL would generate adjusted EBITDA of $630 million in 2024, $698 million in 2025, and $758 million in 2026, with margins expanding from 22.3% to 24.2% over the same time frame. Adjusted EBITDA is the primary metric UL Solutions uses to measure its profitability.
“UL Solutions is the largest TIC provider in North America and the leading provider of outsourced product TIC services globally,” Nicholas said. “With a highly reputable brand that is supported by the widely recognized UL mark, strong technical expertise, scale, and global reach, we believe UL enjoys unique competitive advantages and will continue to drive strong organic and inorganic top-line growth in a market with significant barriers to entry. We believe the outsourced product TIC market can grow in the midsingle-digit percent range, supported by secular tailwinds including: new emerging technologies, increased product proliferation, evolving global regulations and standards, global supply chain complexities, heightened consumer expectations, and increasing focus on ESG.”
Nicholas continued, “We see a number of different paths to attractive top- and bottom-line growth for UL Solutions. These include adding new clients, expanding wallet share, entering new product areas, accelerating the growth of its software business, improving operating efficiency and margins, and consolidating the highly fragmented TIC market.”
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Coverage Universe
Outperform (Buy): 72%
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