Lincoln Electric (NASDAQ:LECO): Downgraded to Sell, $35 Tgt at Piper Jaffray
Piper Jaffray is out downgrading Lincoln Electric (NASDAQ:LECO) to Sell from Neutral, while lowering tgt to $35 from $44 as they believe that negative earnings revisions over the next year and sustained low visibility around a recovery will push the stock back to the lows ($35 per share) set in late-November 2008.
LECO shares have rallied along with other 'infrastructure plays'. It is becoming increasingly clear that benefits from the federal stimulus package will be minimal at best in FY09 and more likely to come in FY10/FY11.
In the meantime, Piper's channel checks with key customers and end markets are pointing to deteriorating unit volume demand and price concessions.
Firm is sharply lowering their FY09 sales and EPS estimates and initiating FY10 estimates that fall well shy of Street consensus. A return to past recession trough margins would equate to earnings of $2.35/share.
Notablecalls: This one will work big, I suspect. With Caterpillar (NYSE:CAT) out with dismal results and guidance I think LECO can do 3-4 pts of downside on this downgrade.
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
