KeyBanc Upgrades Gardner Denver (GDI) to Buy; $56 PT

July 24, 2008 10:52 AM EDT

KeyBanc upgrades Gardner Denver (NYSE: GDI) from Hold to Buy. The firm has a $56 price target on the stock.

Shares of Gardner Denver are down 18% today on the back of concerning earnings reported yesterday after the close. The firm believes this weakness represents a compelling buying opportunity as KeyBanc sees numerous catalysts that could drive Gardner Denver's stock price higher:

• A re-acceleration in the Petroleum Pump business, most notably for its higher-margin drilling pumps
  
• the recent acquisition of CompAir is an excellent fit and will be a notable contributor to earnings growth in 2009. The firm estimates that EPS could increase by $0.25-$0.30 over the next year and
  
• further margin expansion in Compressor and better free cash flow conversion as a result of greater emphasis on Lean initiatives.

Gardner Denver, Inc. designs, manufactures, and markets compressor and vacuum products, and fluid transfer products primarily in the United States, Europe, Asia, Canada, and Latin America.

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