Wells Fargo Says Sell-Off in Martin Marietta (MLM) Shares Overdone, DA Davidson Upgrades

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Several analysts are defending shares of Martin Marietta Materials (NYSE: MLM) Thursday morning following Wednesday's 8 percent decline on the heels of some bearish comments from hedge fund manager David Einhorn at the Ira Sohn Conference. Notably, shares of Vulcan Materials (NYSE: VMC) also fell about 8 percent in sympathy.

• Wells Fargo - Although the firm's analysts said it wasn't clear on exactly what Einhorn was referring to in his presentation, "we don't believe his comments on valuation and government stimulus represent any new information, and we believe investors are already aware of both. Those two factors alone do not seem to justify the sell-offs in our view."
  
  As far as the "valuation" argument, while Wells Fargo said the stock has indeed "been trading above 'normal' P/Es for several years... we have maintained that many investors are not focused on earnings on year out when buying shares of aggregate companies given the significant operating leverage associated with the businesses and the inherent value of the companies' hard-to-replicate asset bases."
  
  Firm maintains Market Perform rating on Martin Marietta Materials shares.
  
  
• DA Davidson - Upgraded MLM shares from Underperform to Neutral in a mid-day research note, sending shares ticking into positive territory (however the stock is now back in the red). The firm noted shares have fallen more than 20 percent since a February 8th downgrade.
  
  "David Einhorn's recent attention to the stock could be a shorter-term headwind. On the flip side, private sector activities are picking up and any evidence of forthcoming improvement in highway spending could be well received as we believe current expectations for this end market are relatively low."

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Greenlight Capital, David Einhorn, D.A. Davidson, Hedge Funds, Earnings, Wells Fargo

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