UPDATE: KeyBanc Upgrades Regal Beloit (RBC) to Overweight; Positive on Rexnord Deal
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(Updated - February 17, 2021 8:08 AM EST)
KeyBanc analyst Jeffrey Hammond upgraded Regal Beloit (NYSE: RBC) from Sector Weight to Overweight with a price target of $155.00.
The analyst commented, "Relative to our recent downgrades, both the structure and synergies of the then-speculated and now-confirmed deal have proven more favorable than our expectations at that time; accordingly, we are upgrading shares of RBC and RXN to Overweight (from Sector Weight). In short, through the deal, we believe RXN is unlocking trapped value in WM while maintaining a stake in PMC and the cyclical recovery ahead; together, these dynamics support a ~$60 stock, as outlined on page 2. As for RBC, while synergies of ~$120M seem aggressive on the headline, we’ve become more comfortable with the target (and even potential upside to it), especially given unembedded runway on the revenue side; we also believe a conservative pro forma balance sheet will keep management on the offensive, while the addition of this high-quality asset should accelerate RBC’s ongoing valuation re-rating; we embed this, as well as a ~$7/sh. dividend assumption, into our $155 PT."
Shares of Regal Beloit closed at $132.95 yesterday.
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