Canaccord Adams Downgrades Astec Industries (ASTE) to Hold; Disappointing Qtr

October 21, 2009 1:00 PM EDT

Canaccord Adams downgrades Astec Industries (Nasdaq: ASTE) from Buy to Hold. Price target lowered to $25 from $40.

Canaccord analyst says, "This was a very disappointing quarter for Astec, in our view. Although the company has experienced some benefit from the stimulus within its mobile asphalt paving segment – Q3 revenues were essentially flat q/q at $36.8M, but up from $28M in Q3/08 – the lack of clarity on a new highway spending bill is keeping domestic customers on the sidelines. While asphalt plant equipment revenue declined 36% sequentially to $44.6M, management noted that approximately $26M of revenue (mostly asphalt plant-related) slipped to Q4. Management guided for Q4 revenue and EPS to be similar to those reported in Q3, which suggests that revenues are actually declining in the asphalt group after subtracting the $26M in sales that slipped to Q4. For 2010, management expects revenue and EPS to be flat with what is anticipated for 2009...We reduce our 2009 and 2010 EPS estimates to $0.96 and $0.95, from $1.32 and $2.50, respectively."

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