Leerink Swann Upgrades Waters Corp. (WAT) to Outperform; Revises Estimates

October 28, 2009 8:48 AM EDT

Leerink Swann upgrades Waters Corp. (NYSE: WAT) from Market Perform to Outperform.

Leerink analyst says, "We are upgrading WAT to OP following a solid 3Q beat and improved conviction that operational improvements and share repurchase could drive material EPS upside in FY10. Our 12-month valuation of $66 - $70 is based on 17-18x our FY10E EPS of $3.88...After speaking with management yesterday, we came away with improved conviction on the FY10 EPS outlook. Roughly 15% - 20% of WAT's total revenues are driven by Acquity equipment, manufacturing for which is due to be shifted to Singapore in FY10. Initial steps in this transition are underway now and we expect Singapore scale-up will materialize in 2H10. While COGS headwinds are likely to surface in 1H10 due to GBP fluctuations (3% of sales but 10% of COGS) and fewer yoy selling days in 1Q, we think the 2H10 benefit to GM's should be material and sustainable...We expect the shift to Singapore will provide a slight benefit to the tax rate in 2H10 and that another $200MM - $250MM in share repurchase will also help to power our revised FY10E of $3.88. All of this assumes organic revenue growth of just 5.7%."

To see more analyst ratings on WAT Click Here.

Waters Corporation operates as an analytical instrument manufacturer primarily in the United States, Europe, Japan, and Asia.

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