Barclays Maintains an 'Overweight' on Joy Global (JOYG); LeTourneau Acquisition: Good Strategic Fit with Significant Accretion Potential
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Price: $89.65 --0%
Rating Summary:
1 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 5 | New: 25
Rating Summary:
1 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 5 | New: 25
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Barclays maintains an 'Overweight' on Joy Global (NASDAQ: JOYG), PT $111.
Barclays analyst says, "We believe JOYG's $1.1bn announced acquisition of LeTourneau Technologies is a solid strategic transaction and highly complimentary to Joy's existing businesses. While we like that there seem to be a number of manufacturing, distribution, and aftermarket synergies between the two businesses, we also believe this acquisition puts JOYG in a relatively stronger position (with a broader product portfolio) to effectively compete head to head with a combined Caterpillar (NYSE: CAT) / Bucyrus (Nasdaq: BUCY) in the surface mining market."
"We think the transaction price at ~9.5x 2010 EBITDA and ~8x our estimated 2011 EBITDA of $120mm seems fair. This compares to CAT's acquisition of BUCY at ~10.5x our current 2011 EBITDA estimate of $821mm. In our view, the deal could be as much as $0.30-0.40 accretive in FY12 (excluding $40mm of synergies by 2013) and assuming low/mid-teens EBIT margin and revenue of $1bn+ in FY2012."
For more ratings news on Joy Global click here and for the rating history of Joy Global click here.
Shares of Joy Global closed at $88.36 yesterday.
Barclays analyst says, "We believe JOYG's $1.1bn announced acquisition of LeTourneau Technologies is a solid strategic transaction and highly complimentary to Joy's existing businesses. While we like that there seem to be a number of manufacturing, distribution, and aftermarket synergies between the two businesses, we also believe this acquisition puts JOYG in a relatively stronger position (with a broader product portfolio) to effectively compete head to head with a combined Caterpillar (NYSE: CAT) / Bucyrus (Nasdaq: BUCY) in the surface mining market."
"We think the transaction price at ~9.5x 2010 EBITDA and ~8x our estimated 2011 EBITDA of $120mm seems fair. This compares to CAT's acquisition of BUCY at ~10.5x our current 2011 EBITDA estimate of $821mm. In our view, the deal could be as much as $0.30-0.40 accretive in FY12 (excluding $40mm of synergies by 2013) and assuming low/mid-teens EBIT margin and revenue of $1bn+ in FY2012."
For more ratings news on Joy Global click here and for the rating history of Joy Global click here.
Shares of Joy Global closed at $88.36 yesterday.
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