FBR Capital Maintains an 'Outperform' on Tyco (TYC); Raises PT & Estimates

November 11, 2009 9:13 AM EST

FBR Capital maintains an Outperform rating on Tyco (NYSE: TYC), raises price target from $39 to $41.

FBR analyst says, "We have seen this movie before. Tyco put up solid 4Q results, handily beating consensus by $0.07 on both better top line and margins. Then, according to its now-all-too-familiar script, the company rolled out what we emphatically consider to be conservative assumptions underlying its fiscal 2010 guidance. We appreciate the spirit of the low-balled guidance since CEO Ed Breen and team continue to embrace the "under-promise and over-deliver" model. In this case, we consider management's 2010 framework to be arguably more of a "worst-case" scenario since it assumes (1) no use of Tyco's $2.4 billion cash on the balance sheet, which we could see being redeployed on ADT bulk account purchases, accretive bolt-on acquisitions, or buybacks; and (2) no improvement in end-market conditions. Not surprisingly, the guidance fueled some modest profit taking on Tuesday. We believe this dip provides an opportunity for investors to put fresh money to work. We are raising our 2010 EPS estimate from $2.40 to $2.50...Our positive thesis on TYC is based on its appeal as a "defensive early cycle" and as an attractively valued stock."

To see more analyst ratings on TYC Click Here.

Tyco International, Ltd., together with its subsidiaries, provides security products and services, fire protection and detection products and services, valves and controls, and other industrial products to various customers worldwide.

Related Categories

Analyst Comments

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?