Barclays on U.S. Machinery: Mixed Brazilian Construction Markets

Barclays on U.S. Machinery: Pockets of Strength in Mixed Brazilian Construction Markets

Analyst, Andy Kaplowitz, went to the M&T construction expo in Brazil and met with several companies that trade on our exchanges. Kaplowitz's overall sense was mixed, with cran and AWP markets mostly healthy, but roadbuilding and general construction dismal.

On individual companies, he said, "Manitowoc (NYSE: MTW) and Terex (NYSE: TEX) management seemed quite bullish about most of their businesses in Latin America, while Caterpillar (NYSE: CAT) and Komatsu seemed more subdued about construction markets (in Latam) but still positive about mining markets. MTW and TEX both mentioned still-strong expected growth in their Latin America crane business, led by significant energy, mining, and infrastructure work, and we sensed managements' visibility for their crane business was above average. We think CAT's 2012 construction-related sales growth will end up being flattish in Brazil, but mining still seems strong. Deere (NYSE: DE) is early in the process of building out its Brazil construction business."

Kaplowitz favors Manitowac (NYSE: MTW) and AGCO Corp (Nasdaq: AGCO)

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