KeyBanc Upgrades Ferro (FOE) to Buy; Turnaround Valuation
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KeyBanc upgrades Ferro Corporation (NYSE: FOE) from Hold to Buy. Price target $8.
KeyBanc analyst says, "After recent due diligence and given better confidence that FOE has attractive long-term normalized earnings potential and that the worst in terms of demand could have been seen in 1Q09, we are upgrading FOE to a BUY rating and establishing a 12-month price target of $8 based on a 2009 EV/Sales multiple of 0.6x. On a historical basis, the stock has traded in an EV/Sales multiple range of 0.6-0.9x; our upside multiple is set at the very low end. At current levels, the stock is trading at a 2009 EV/ Sales multiple of 0.5x, which we believe is an attractive long-term entry point, recognizing that 2009E will likely mark very depressed earnings. On the positive, we believe FOE has done a good job taking out costs, setting itself up for strong upside operating leverage once demand stabilizes and turns positive. While we see a loss of $0.65 looming for the Company in 2009E, partly due to higher interest expense, the losses should lessen as 2009E unfolds and breakeven levels should be seen by late 2H09E. "
To see more analyst ratings on FOE Click Here.
Ferro Corporation, is a producer of specialty materials and chemicals that are sold to a range of manufacturers who, in turn, make products for end-use markets.
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