Jefferies Remains Extremely Bullish on Machinery Sector, Raises Price Target on Stocks (AGCO), (CHN), (DE)
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Rating Summary:
17 Buy, 12 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 17 | Down: 14 | New: 17
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Jefferies became bullish on the machinery sector back in mid-October when it upgraded a number of its estimates and rating on stocks within the industry. The firm reports the sector traded above the S&P by 8 percent during the Q4 period and is up roughly 5 percent year to date.
Even with the recent strong performance among stocks in the machinery sector, Jefferies continues to see an additional 15-20 percent upside. The firm forecasts machinery revenues will increase by 5-10 percent over 2012 despite a sluggish global growth environment. Margins should also steadily grow as the price of raw materials fall and supply chain inefficiencies begin to fade.
For Q4, Jefferies expects a majority of the machinery companies will beat expectations, but feels this upside may already be priced into most of the stocks. Based on the continued market uncertainty, the firm believes management teams will offer conservative guidance for fiscal 2012.
As a result of recent market trends and the firm’s forecast of the market and industry, Jefferies is raising its price targets on AGCO Corp. (Nasdaq: AGCO) from $55 to $60, on China Fund Inc. (NYSE: CHN) from $41 to $54, and on Deere & Company (NYSE: DE) from $80 to $83. The firm has Buy rating on shares of AGCO and CHN, but has a Hold rating on shares of DE.
Other companies Jefferies predicts will outperform during the earning season includes Caterpillar (NYSE: CAT), CNH Global (NYSE: CNH), Eaton Corp (NYSE: ETN), Illinois Tool Works (NYSE: ITW), PACCAR (Nasdaq: PCAR), and Timken (NYSE: TKR). The firm has a Buy rating on all of these stocks.
Even with the recent strong performance among stocks in the machinery sector, Jefferies continues to see an additional 15-20 percent upside. The firm forecasts machinery revenues will increase by 5-10 percent over 2012 despite a sluggish global growth environment. Margins should also steadily grow as the price of raw materials fall and supply chain inefficiencies begin to fade.
For Q4, Jefferies expects a majority of the machinery companies will beat expectations, but feels this upside may already be priced into most of the stocks. Based on the continued market uncertainty, the firm believes management teams will offer conservative guidance for fiscal 2012.
As a result of recent market trends and the firm’s forecast of the market and industry, Jefferies is raising its price targets on AGCO Corp. (Nasdaq: AGCO) from $55 to $60, on China Fund Inc. (NYSE: CHN) from $41 to $54, and on Deere & Company (NYSE: DE) from $80 to $83. The firm has Buy rating on shares of AGCO and CHN, but has a Hold rating on shares of DE.
Other companies Jefferies predicts will outperform during the earning season includes Caterpillar (NYSE: CAT), CNH Global (NYSE: CNH), Eaton Corp (NYSE: ETN), Illinois Tool Works (NYSE: ITW), PACCAR (Nasdaq: PCAR), and Timken (NYSE: TKR). The firm has a Buy rating on all of these stocks.
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