UBS Downgrades Joy Global (JOYG) to Neutral; Cheap Natural Gas is Leading U.S. Utilities to Switch From Coal
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Price: $89.65 --0%
Rating Summary:
1 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 9 | New: 13
Rating Summary:
1 Buy, 1 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 9 | New: 13
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UBS downgraded Joy Global (NASDAQ: JOYG) from Buy to Neutral, price target cut from $112 to $85.
UBS analyst said, "Recent data indicate increasing U.S. stockpiles of coal due to low electricity generation from a warm winter, as well as a shift to lower priced natural gas. While some of the pullback in coal demand is a result of cyclical factors, we believe structural challenges to coal, including the shift to natural gas and stringent regulatory standards, are likely to persist (& will be difficult to offset through exports). We note 25%-30% of JOY’s sales are to U.S. coal end markets. As coal producers lower output, growth rates for JOY’s high margin aftermarket business, as well as new equipment sales, could be impacted...We see risk to JOY’s ability to grow sales/margins if Caterpillar (NYSE: CAT) chooses to compete aggressively for market share."
"Based on lower U.S. coal demand (and lower incrementals), we are lowering our FY12, FY13 & FY14 EPS ests to $7.55, $8.35 & $8.80 from $7.75, $8.50 & $9.20."
For an analyst ratings summary and ratings history on Joy Global click here. For more ratings news on Joy Global click here.
Shares of Joy Global closed at $89.65 yesterday.
UBS analyst said, "Recent data indicate increasing U.S. stockpiles of coal due to low electricity generation from a warm winter, as well as a shift to lower priced natural gas. While some of the pullback in coal demand is a result of cyclical factors, we believe structural challenges to coal, including the shift to natural gas and stringent regulatory standards, are likely to persist (& will be difficult to offset through exports). We note 25%-30% of JOY’s sales are to U.S. coal end markets. As coal producers lower output, growth rates for JOY’s high margin aftermarket business, as well as new equipment sales, could be impacted...We see risk to JOY’s ability to grow sales/margins if Caterpillar (NYSE: CAT) chooses to compete aggressively for market share."
"Based on lower U.S. coal demand (and lower incrementals), we are lowering our FY12, FY13 & FY14 EPS ests to $7.55, $8.35 & $8.80 from $7.75, $8.50 & $9.20."
For an analyst ratings summary and ratings history on Joy Global click here. For more ratings news on Joy Global click here.
Shares of Joy Global closed at $89.65 yesterday.
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