UPDATE: Seaport Global Securities Upgrades Modine Manufacturing (MOD) to Buy

Seaport Global Securities upgraded Modine Manufacturing (NYSE: MOD) from Neutral to Buy with a price target of $12. Analyst Michael Shlisky thinks shares have more room to run.

Shlisky commented, "In our view, near-term base business guidance appears reasonable; management noted that in FQ4 (CQ1), the truck OEMs didn't throw any "curveballs" at MOD; we also noted increased optimism on North American truck margin mix. That said, much of our optimism revolves around the SDG program, which targets 7%-8% operating margins by the end of FY2018, from 4%-5% in prior years (note: FY2017 begins next week) and $100MM of acquired revenue intended to diversify away from core vehicular markets, among other goals. We noted a very confident tone that the $40MM-$50MM of cost reductions embedded in the plan are progressing well. Our new $12 price target (from $7.50) may be conservative, as it represents ~13x CY2017 EPS (vs. the peer group at ~15x) as well as ~6x EV/EBITDA (vs. the peer group at ~9x). Furthermore, our FY2018 estimates only assume a 5.8% operating margin (vs. management's goal of 7%-8%) and no acquisitions or share repurchases (the company had $48MM, or ~10% of market cap, left on its 12-month plan as of last quarter)."

The analyst added, "In short, we believe there are several paths for MOD to beat our new expectations, even if end markets deteriorate from here, and the valuation does not need to match the peer group to see substantial upside in the share price."

For an analyst ratings summary and ratings history on Modine Manufacturing click here. For more ratings news on Modine Manufacturing click here.

Shares of Modine Manufacturing closed at $9.69 yesterday.

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