UPDATE: Global Hunter Securities Starts SPX Corp. (SPW) at Neutral

Global Hunter Securities initiated coverage on SPX Corp. (NYSE: SPW) with a Neutral rating and a price target of $71. Analyst Ryan Cassil noted uncertainly with organic growth in its Flow Technology segment and concerns performance at its Thermal segment will underwhelm.

"SPW has announced plans to spin off its Flow Technology business to shareholders in a tax-free transaction during Q3:15, creating a pure-play flow company and leaving the remaining infrastructure businesses. While we believe much of SPW's 2015 guidance was de-risked last quarter, we are on the sidelines with a Neutral rating as global markets remain challenging, SPW's consolidated operating metrics are below average and we await more details on the spin-off. Our $71 price target is based on a 9.4x EV/ EBITDA multiple applied to our 2015 estimates, which is below the group multiple and in line with its historical average," said Cassil.

"We believe the lingering effects of lower energy capital spending will still be a drag for the Flow Technology segment's long-cycle project orders in Q2:15. MRO activity is expected to be modestly better than in Q1:15. Pricing throughout the segment is likely to be challenged. Thermal profitability was guided to grow 130 bps in 2015, however, we believe there is some risk in achieving this goal, which may begin to emerge in Q2:15 results and the company's longer-term outlook," added the analyst.

For an analyst ratings summary and ratings history on SPX Corp. click here. For more ratings news on SPX Corp. click here.

Shares of SPX Corp. closed at $68.56 yesterday.

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