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FBR Capital Upgrades ITT Corp. (ITT) to Market Perform; Brake Performance Drives Solid Quarter

August 2, 2013 7:59 AM EDT Send to a Friend
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Price: $47.21 -1.17%

Rating Summary:
    8 Buy, 10 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 20 | Down: 27 | New: 8
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FBR Capital is upgrading ITT Corp (NYSE: ITT) from Underperform to Market Perform, while raising its price target from $18.50 up to $32.

Analyst Ajay Kejriwal commented, Our Underperform thesis on ITT shares was predicated on potential headwinds in the company's mining and interconnect markets and ITT's persistent low-quality earnings. ITT's earnings quality has remained low over the past several quarters as reflected in the pulling out of several vaguely described expense items in "repositioning," "restructuring," and "transformation," and the company's FCF conversion has been significantly below peers (67% in 1H13 versus 90%–100% for peers). However, this does not seem to have affected shares and, unlike our expectations, has not been a key debatable topic with investors.

Kejriwal also noted that market share gains in Europe offset overall global weakness, saying, ITT achieved organic growth of 12% in the global automotive brake pad market where despite declines in European car sales, the company has gained share over competitors including Honeywell.

For an analyst ratings summary and ratings history on ITT Corp. click here. For more ratings news on ITT Corp. click here.

Shares of ITT Corp. closed at $34.34 yesterday.




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