Jefferies Raises Price Target on Parker-Hannifin (PH) Ahead of Acquisition Close
Jefferies reiterated a Hold rating on Parker-Hannifin (NYSE: PH), and raised the price target to $145.00 (from $110.00), after updating the company model. The update comes as PH prepares to close on its acquisition of CLARCOR (NYSE: CLC).
The transaction is meant to be complimentary to PH's existing filtration business and management does not anticipate anti-trust issues. Post transaction the combined filtration business will represent ~$2.6bln of sales or 20% of total PH revenues.
Analyst Stephen Volkmann commented, "We provide a proforma model and raise our price target as higher multiple filtration grows as a percent of Parker's business. We believe the acquisition makes strategic sense for Parker and cost synergies while not conservative should be achievable. Still, Parker paid a premium price and current valuation reflects the combined potential, in our view. We expect CLC to be roughly $0.05 and $0.20 accretive in FY17 and FY18, respectively."
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Shares of Parker-Hannifin closed at $141.90 yesterday.