Cowen Cuts Price Target on Emerson Electric (EMR) Following 3Q
Cowen maintained a Market Perform rating on Emerson (NYSE: EMR), and cut the price target to $52.00 (from $59.00), following 3Q results. EMR reported EPS of $0.84 beating Street estimates by 1¢.
Analyst Gautam Khanna commented, "Q3:F15 EPS of $0.84 optically beat Street by 1¢, but had $0.03 plus from lower tax and a $0.01 plus from lower share count. Organic sales fell 5% (-13% reported; FX was 5% drag; divestitures pared 3%), with every region down ex MEA -- US was -7%, Europe -2%, Asia -7%, Latin America -10%, and MEA +3%. By segment, organic drops were broad-based ex C&RS (+1% on U.S. construction). Process's weakness (organic -4%; 17.9% margin vs. 20.4% in Q3:14) reflected drop in upstream O&G demand and mix, factors that may linger through H1:16+. Network Power margin again was soft (3.6% vs. 8.6% in Q3:14 & 3.2% in Q2:14), on an 11% organic decline, keyed to reduced telecom capex. IA results also were soft (organic -5%; IA's O&G exposure is 15% of sales). Climate Tech results were consistent (-3% organic; 130bp margin drop) with SEER 13-14 transition aftershocks. FCF was $342MM (60% conversion) restrained by $360MM tax payment on divestiture gains. EMR repurchased $639MM of stock in Q3."
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Shares of Emerson closed at $49.64 yesterday.