Latest Credit Suisse comments on TEX. $46 target price!
Latest comments from Credit Suisse. CS target price represents 48% plus upside from current levels.
21 March 2013
Construction & Farm Machinery Terex Corporation (TEX)
SMALL & MID CAP RESEARCH
Rating OUTPERFORM* [V]
Target price (US$) 46.00¹
Analyst Day Takeaways
■ Market Trends Support 2013 Guidance. AWP tone remains positive in US, with orders looking healthy into Q1. Europe AWP uptick has continued since Q4 EPS call and even seems slightly ahead of plan. In Crane, TEX sees oppt’y for Europe orders (with rough, then all-terrain, then crawler) to improve in 2H'13. ME remains strong and LA looks ok. The US appears stable. We expect TEX takes restructuring charges in Q1'13 in MHPS to address high overhead (SGA at 22%, should be 16-17% for year) in light of weaker volumes, particularly Europe.
■ More Color On LT Targets. By 2015, TEX's goal is $10B in sales and 10% OM, implying at least $5 EPS. We note $0.50-0.75 in EPS is not fully baked into 2015 targets from tax oppt’ys and op initiatives like global trading, TMS and TFS. Cranes revs are forecast at $2.6B and more than 11.5% OM, with growth mostly from market and some help from fixing utilities and better services. AWP sales are forecast at $2.9B and more than 15% OM. NA markets could exceed 110% of 2007 levels by 2015, and 2012 was 22% less than 2007. Europe is still 40% below 2007 peak. In MP, TEX is targeting $1B sales and greater than 12.5% OM, from recovery in mobile equipment (40-50% below prior peak) and new product intros. Minerals processing growth reflects new products and expansion into EE’s. In MHPS, TEX is targeting $2.2B in sales and 8% OM from restructuring, getting back share, and product enhancements. Construction targets sales $1.4B and 5% mgn by optimizing cost structure and divestitures of unprofitable businesses. Ex divestitures, Construction was profitable the past 6 quarters.