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Nordson shares tumble on weak 3Q outlook

NEW YORK (AP) -- Shares of Nordson Corp. fell Friday after the adhesives and industrial coatings maker posted fiscal second-quarter results that met Wall Street predictions, but issued a disappointing outlook for the current quarter.

THE SPARK: For the quarter ended April 30, Nordson's profit rose 5 percent to $54.6 million, or 84 cents per share. Revenue jumped 21 percent to $382.1 million, boosted by acquisitions.

Analysts, on average, expected a profit of 84 cents per share on $382.4 million in revenue, according to FactSet.

For the current quarter, Nordson projected a profit of $1 to $1.09 per share on $404 million to $419 million in revenue. Analysts expect a profit of $1.15 per share on $428.6 million in revenue.

THE BIG PICTURE: Westlake, Ohio-based Nordson said it expects its overall third-quarter revenue to increase between 6 percent and 10 percent from year-ago levels.

As in the recent quarter, Nordson said it expects the bulk of that growth to stem from acquisitions, with tough economic conditions limiting organic sales growth to about 2 percent.

THE ANALYSIS: Janney Capital Markets analyst Liam Burke, who backed his "Neutral" rating for the stock, said Nordson's sales this year will hinge on the economic recoveries of the markets it serves.

Despite that uncertainty, he said the company has strong financial fundamentals, pointing to its strong free cash flow and returns on invested capital.

KeyBanc's Matt Summerville said that while Nordson will face tough comparisons for the rest of the fiscal year, its long-term potential hasn't changed. But he said investors should wait for the company's shares to drop a bit more before investing and reaffirmed his "Hold" rating for the stock.

THE SHARES: Down $5.66, or 7.7 percent, to $67.48 in afternoon trading after falling as low as $65.46 earlier in the session. Over the past 52 weeks, the shares have traded between $47.82 and $75.25.