Search Coverage List, Models & Reports
Search Results1-10 out of 372
WIW #586: 3M sales weakness has typically been a very reliable indicator of broader short cycle pressure. UP-rated ITW, ROK and PP-rated PH are highly correlated, while OP-rated GE, UTX and HUBB are most decoupled.
In response to some confusion around the incremental cash flow disclosures provided, we highlight that true Aviation FCF in 2019 was closer to $5bn (not $3bn), that net working capital pressure is likely no more than $3-4bn over 2019/20 and that GE has sufficient cash over 2019/20 to completely retire its unfunded pension, insurance and preferred stock liabilities. No change to our $15 target and OP rating.
3M’s new segment structure is more customer-centric and so could help drive long term growth. However, the near-term demand picture remains challenging and our latest model MtM sees us move further below consensus. We have reduced our YE19 PT from $202 to $200. Remain UP.
We expect HDS stock to trade well on back on a 10-15c (3-4%) guide-up to FY19 estimates and stronger FM gross margin dynamics. Weak February sales and 4Q18 margin for C&I will be our major due diligence points for the 8am call.
We realize that the 2019 reset and long term recovery story will not appeal to all. But, in our experience, a true, self-help turnaround story like GE, resonates with long term investors like nothing else in EE/MI. We continue to see 2021 path to $1 EPS/FCF and maintain $15 YE19 target price.
WIW #585: Out latest inventory tracker highlights heavy channels in MRO, electrical, auto and semi, which flags potential sell-in risks for consumables-rich industrials (3M, ITW, FTV) and electrical/automation OEMs (ETN, HUBB, ROK). Machinery channel inventories look too low across the board, which we view as a positive for ETN and PH. Our proprietary work suggests modest bias to inventory draw-down in the US, underlining short cycle risks.
It ain’t pretty, but that’s not a major surprise. There’s a lot of detail to work through – much more detail than we can capture in this quick summary – but the bottom line is that 2019 is a transitional year with most of the factors depressing earnings and free cash flow transitory in nature. Short term investors will likely ignore these factors, while long term investors will likely agree with us that there is a credible path to significant earnings and free cash flow expansion by 2021. The call is at 8/30am.
We see path to high end with FY19 guidance restated, with street likely in lower half of EPS range. Stock remains too cheap and we see further scope for multiple expansion on market outgrowth and equity friendly capital allocation. We raise our target from $48 to $51.
- 1 of 38
- next →