Deutsche Bank Downgrades SPX Corporation (SPXC) to Sell

Deutsche Bank downgraded SPX Corporation (NYSE: SPXC) from Hold to Sell with a price target of $9.50 (from $57.00). Analyst John G. Inch thinks fundamentals are challenged and said high liabilities add to risk.

"In our opinion, our Sell rating is reinforced by multiple SPXC challenges beyond difficult peer valuation. These include a profile of low-growth cyclical end markets (in the early innings of an industrial recession), lack of synergy between the business units, the absence of Power segment profitability, relatively high debt, no dividend and no plan to repurchase stock or to pursue M&A throughout next year. The company has also ruled out meaningful portfolio divestitures that might otherwise be considered a potential share price catalyst," said Inch.

"Compounding SPX’s financial liabilities are high contingent liabilities + potential asbestos (where post-spin disclosure has been lacking). We calculate gross debt to EBITDA (before contingent liabilities + asbestos) at roughly 4x – or well above the debt levels of other multi-industry companies," added the analyst.

For an analyst ratings summary and ratings history on SPX Corporation click here. For more ratings news on SPX Corporation click here.

Shares of SPX Corporation closed at $12.21 yesterday.

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