Shares of Titan International fell Wednesday after the industrial wheel and tire company said it may bid for the remaining shares of Titan Europe PLC. Jefferies & Co. downgraded the stock.
THE SPARK: Titan International said that it has approached the board Titan Europe PLC, which may lead to an offer. Titan International currently has a 22 percent stake in the UK company, which serves many of the same markets in Europe.
Jefferies analyst Stephen Volkmann downgraded his rating on the company, not because of the offer, but due to broader concerns about the industry. A drought in North America may diminish the ability of farmers to buy new equipment. About half of the company's sales are dependent on the North American farm tire market. Purchasing within global mining markets may have softened as well.
THE ANALYSIS: Overall, the machinery industry is seeing some moderation in North America and weakness outside the U.S., according to Volcker. He lowered his rating on Titan to "Hold" from "Buy". He also cut his second-quarter and full-year 2012 earnings estimates and lowered his price target to $24 from $30.
SHARE ACTION: Titan shares fell 55 cents, more than 2 percent, to $21.81 by midday. Shares of the Quincy, Ill., company have traded between $12.97 and $29.95 in the past 52 weeks.