Ahead of the Bell: Martin Marietta Materials

Analyst downgrades Martin Marietta Materials following run-up in share value

• On 8:52 am EDT, Tuesday September 22, 2009

HARTFORD, Conn. (AP) -- A stronger-than-expected recovery is benefiting Martin Marietta Materials Inc., which supplies gravel and sand to road builders, an analyst said Tuesday as she downgraded the company's shares to reflect new risks.

UBS analyst Timna Tanners cut the Raleigh, N.C., company's shares to "Neutral" from "Buy."

"We believe investors have taken notice of an imminent improvement in earnings, largely as a function of stimulus dollars that should be evident in fourth-quarter profits," she said in a client note.

State and local bonds eligible for a federal subsidy can help offset weak spending on the state level, and the housing sector appears to be stabilizing, she said.

In addition, federal stimulus spending is a key part of an expected recovery next year, she said.

Also, after four years of declining volumes, quarry and overhead costs have been trimmed, Tanners said.

Tanners said she sees a potential boost from spare cash on Martin Marietta's balance sheet, perhaps from small acquisitions.

She expects a fourth-quarter recovery "to be the start of significant stimulus dollar benefit."

She raised her price target to $102 from $97.

Shares of Martin Marietta closed at $99.29 on Monday.