Deutsche Bank Downgrades Stanley Works (SWK) to Sell
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Deutsche Bank downgrades Stanley Works (NYSE: SWK) from Hold to Sell. Price target $27.
Deutsche analyst says, "Premium valuation becoming difficult to justify - SWK sits at the nexus of sharply deteriorating consumer, industrial and construction markets, which combined with its low recurring revenue base and the somewhat discretionary nature of tool budgets means that its valuation premium of 15% vs. diversified industrials is becoming increasingly difficult to justify. We lowered our target price to $27, as we move to EBITDA-based valuations, and given resulting downside from Friday's close, we downgrade our rating from Hold to Sell...Stanley's aggressive move into Security is a smart long-term strategic move, in our view, but means the impending collapse of non-residential markets introduces yet another headwind, albeit moderated by a high mix of recurring revenues (~40%) in this segment."
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