KeyBanc Maintains a 'Buy' Rating on Wabtec Corporation (WAB); Adjusts Estimates & PT
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KeyBanc maintains a 'Buy' rating on Wabtec Corporation (NYSE: WAB), raises price target to $45 from $41.
KeyBanc analyst says, "We consider WAB a unique play on what should be positive domestic and international rail-based transportation trends. In conjunction with its high quality management team, solid balance sheet and excellent cash generation characteristics, we think WAB has several product-based "call options", including Positive Train Control (PTC), other international transit opportunities, Electronically Controlled Pneumatic Brakes (ECP), and domestic High Speed Rail (HSR) (although we consider the latter as relatively unlikely). While we acknowledge the headwinds inherent in the freight OE business, we believe the ongoing incremental improvement in aftermarket revenues could largely offset the decremental margin pressure stemming from declines in railcar and locomotive builds. As such, we believe 2009 will represent trough EPS for WAB, whereas we expect the railcar OEMs will more likely experience trough earnings in 2010. In terms of the domestic freight car and locomotive market, we continue to believe 2010 will have lower build rates than 2009, although we now believe that the number of railcars parked likely approximates 300,000-350,000, down from our prior estimate of 350,000- 400,000 and a peak of more than 500,000."
"We are trimming our 3Q09 estimate to $0.57 from $0.59, which brings our 2009 estimate to $2.51 from $2.52 (rounding). We are also maintaining our 2010 estimate of $2.74 and introducing a 2011 estimate of $2.86.
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Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, provides technology-based equipment and services for the rail industry.
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