KeyBanc Downgrades Meritor (MTOR) to Hold; Higher Risk, Lower Reward, and Few Catalysts
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Price: $36.50 --0%
Rating Summary:
5 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
Rating Summary:
5 Buy, 8 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 18 | New: 20
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KeyBanc downgraded Meritor (NYSE: MTOR) tfrom Buy to Hold.
KeyBanc analyst says, "Following Meritor, Inc.'s (MTOR-NYSE) 4Q11 earnings release and subsequent conference calls we are downgrading to HOLD from BUY based on our belief that: 1) the risk has materially increased given the potential for weaker end markets in Europe, South America and China combined with investor perception that financial risk is high relative to many of its peers; 2) the potential reward is lower given materially lower revenue expectations driven in large part by management's disappointing 2012 revenue guidance, which was approximately $500 million or roughly 10% below our previous estimate; 3) there are few near-term catalysts as sales and EBITDA are expected to decline into 1Q12 driven by lower South America, Chinese and Military sales; and 4) while we acknowledge that the potential long-term upside to the stock is not immaterial (e.g., potentially to the $9-$10 range) in a more bullish market, given the increased risk and the likelihood performance will deteriorate in the near term before possibly improving, we believe other stocks under coverage provide a better risk/reward trade off. Primarily as a result of lower revenue expectations, we are lowering our 2012 earnings estimate to $1.12 from $1.60 (First Call mean $1.69; Management Guidance $1.08-$1.39) as well as introducing a 2013 earnings estimate of $1.46."
For an analyst ratings summary and ratings history on Meritor click here. For more ratings news on Meritor click here.
Shares of Meritor closed at $5.67 yesterday.
KeyBanc analyst says, "Following Meritor, Inc.'s (MTOR-NYSE) 4Q11 earnings release and subsequent conference calls we are downgrading to HOLD from BUY based on our belief that: 1) the risk has materially increased given the potential for weaker end markets in Europe, South America and China combined with investor perception that financial risk is high relative to many of its peers; 2) the potential reward is lower given materially lower revenue expectations driven in large part by management's disappointing 2012 revenue guidance, which was approximately $500 million or roughly 10% below our previous estimate; 3) there are few near-term catalysts as sales and EBITDA are expected to decline into 1Q12 driven by lower South America, Chinese and Military sales; and 4) while we acknowledge that the potential long-term upside to the stock is not immaterial (e.g., potentially to the $9-$10 range) in a more bullish market, given the increased risk and the likelihood performance will deteriorate in the near term before possibly improving, we believe other stocks under coverage provide a better risk/reward trade off. Primarily as a result of lower revenue expectations, we are lowering our 2012 earnings estimate to $1.12 from $1.60 (First Call mean $1.69; Management Guidance $1.08-$1.39) as well as introducing a 2013 earnings estimate of $1.46."
For an analyst ratings summary and ratings history on Meritor click here. For more ratings news on Meritor click here.
Shares of Meritor closed at $5.67 yesterday.
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